Guest Post: Will the Democrats Lose in 2010 (or 2012) Because They Won’t Pass Real Financial Reforms?

By George Washington of Washington’s Blog.

Yesterday, Elliot Spitzer said that the White House’s defense of the financial status quo will give Republicans powerful ammunition in the 2010 elections.

Democratic cheerleader Markos Moulitsas (the “Kos” behind Daily Kos) wrote the following about the Democratic losses in several state elections:

Democratic turnout collapsed. This is a base problem, and this is what Democrats better take from tonight:

… If you water down reform in favor of Blue Dogs and their corporate benefactors, you will lose votes…

If you forget why you were elected — … financial services … reform — you will lose votes.

Tonight proved conclusively that we’re not going to turn out just because you have a (D) next to your name, or because Obama tells us to. We’ll turn out if we feel it’s worth our time and effort to vote, and we’ll work hard to make sure others turn out if you inspire us with bold and decisive action.

The choice is yours. Give us a reason to vote for you, or we sit home.

People elected Obama in the hope that he would be different from Bush. But in the most important ways, he is just continuing Bushand Clinton’s (think repeal of Glass-Steagall) worst policies.

Both the Republican and Democratic party leadership have become lapdops for the big banks and the status quo. Neither are open to real reform or change.

The Democrats haven’t broken up the too big to fails.  They haven’t restored Glass-Steagall.  They haven’t really reined in credit default swaps.  They haven’t pushed for honest accounting or forced the giants to put their toxic SIV-hidden assets back on their books.

People are sick and tired of both parties’ catering to the big boys.  Indeed, given last night’s election results and the Dems’ utter failure to institute any real financial reform, trend forecaster Gerald Calente’s prediction that a third party candidate will win the 2012 presidential election is sounding a little less crazy.

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About George Washington

George Washington is the head writer at Washington’s Blog. A busy professional and former adjunct professor, George’s insatiable curiousity causes him to write on a wide variety of topics, including economics, finance, the environment and politics. For further details, ask Keith Alexander…


  1. ndk

    It would also be helpful if the Democrats weren’t trying to elect a former Senior Partner from Goldman Sachs. I’d sooner vote for a trained rattlesnake, who I suspect could better empathize with us commoners.

    “Limousine Liberals” is sticking very strongly to Democrats, mostly because that’s kinda who they are.

    I live near to Boulder, and I can’t bear to go there, for all the mindbending, unthinking conformity (to a different set of ideals, of course) and arrogance. I had to go to UCB recently for a consulting gig, and I had a long chat with the Environment Colorado folks who were being blown off and ignored by the rich party kids there. They were making jokes about the kids’ Uggs, to which the kids were happily oblivious.

    You and Markos are asking the entire party to reconstitute itself around a new set of people AND ideals. It’s not going to happen. They are the rich, entrenched, and connected elites, and we should expect them to behave the part.

    Republicans are no better, of course. And before you herald Gerald’s prediction, the third party candidate lost last night despite leading strongly in the polls.

    When I took the Pew detailed political affiliation test, I scored as “disenfranchised.” Pretty much right.

      1. ndk

        No, my memory is apparently somewhat affected, while my political views are disaffected. It was some time ago that I took it. Thanks for the correction.

        Nice to have you here on the side of the playing field throwing rotten fruit at the two teams with me, though, charcad. Welcome. :D

  2. albrt

    The democrats have put themselves in serious jeopardy when they should have been enjoying almost complete freedom to implement an agenda that was both sensible and popular.

    I have been a democrat for a long time, but right now the best strategy I can think of to help the democrats is to support Republicans who are running against blue dogs in 2010. If we can get rid of Harry Reid and the 10 worst blue dogs, there is at least a possibility the rest of the caucus will get the message and start trying to take effective action.

    Of course, if the democrats are too far gone the strategy of targeting blue dogs won’t work because the democrats will lose far more seats in 2010, and then they won’t be able to do anything. But there isn’t much I can do about that from where I sit – the democrats in office now are doing a terrible job, and if they don’t get their act together they deserve to lose.

  3. David Mercanus

    Easy to argue that the Democratic party is not especially strong. But by all measures the Republican party is in far, far worse condition re: reputation, and has very unfavorable demographic trands as well.

    Are enough people disenfranchised to have a 3rd party win a national election? I doubt it. I’d say at most, we could see a ’92 Perot like phenomenon. But to seed an actual party would cost billions, and would need to be sustained over years. And it’s not a sure thing.

    We have two parties, both of whom are coalitions…not monolithic. Easy to forget that.

    As for Obama, he has plenty of time to move in the right direction re: reform, and he also has a team with great command of tools and strategies. After all, command of tools and strategies are what enabled GWB to become and be reelected as President. And 9-11 helped as well, of course.

    Better big picture ideas than a 3rd party? Public financing of campaigns. And/or end the small state over-representation in the US Senate. Then it would be far easier to have the kind of reform I see called for on this site. The system is broken, not the people of the country.

    1. ndk

      “… and has very unfavorable demographic trands as well.”

      See, I find this really offensive. You’re consigning a large segment of American society to obsolescence because they’re not having enough babies. I would much rather see efforts made at reconciliation and understanding, rather than blatant, polarizing dismissal.

      And/or end the small state over-representation in the US Senate.

      You would do well to remember that this — along with population-based representation in the other half of the bicameral legislature — was a very deliberate feature of the system. It was an attempt to ensure cohesion by ensuring parts of the country that are less populous have representation too, if not equal to that of the more populous states. A constitutional change to reduce this representation, even if it could be achieved, would likely cause these states to seek recourse through other means.

      Please, seek compromise and understanding, rather than these active efforts to marginalize they with whom you disagree.

      1. David Mercanus

        You are inferring “dismissal”, while I am merely observing.

        We do have majority rule (except maybe the US Senate!). Sometimes in politics, you just don’t get what you want because too many of the other team want something else. That’s living in a Democracy. The ballot box is where you get revenge.

        1. slg

          We have majority rule but also minority right. E.g., it’s perfectly democratic for 51% to decide to remove the rights of the other 49%; but it’s not allowed under the rules of our system (and of other functioning democracies too, be it noted). The “overrepresentation” in the Senate is an example of protecting minority rights, and (as noted) it was a deliberate feature of our system.

          I’ve seen it asserted (but can’t cite a ref, sorry) that one of Canada’s problems is that low-population provinces don’t have two senators looking out for them. This tends to exacerbate any secessionist tendencies.

          1. pebird

            Goldman Sachs is the ultimate proof of minority rights over the majority. We don’t need convincing.

    2. alex

      I strongly agree that public financing of campaigns, while not likely in the near future, is a more realistic, and possibly more effective, measure than 3rd parties. While some D’s and R’s might actually like to stop prostituting themselves, none of them want a 3rd party to get in on the fun. Besides, once a 3rd party got it in would be well bribed too.

      As to undemocratic representation in the senate, that’s quixotic. There’s a reason they call it the Great Compromise. As a lifelong resident of the 3rd most populous state I agree it sucks. However it’s also the only part of the Constitution that can’t be changed by the ordinary amendment process: “no State, without its Consent, shall be deprived of its equal Suffrage in the Senate”.

  4. MyLessThanPrimeBeef

    I think most politicans are green politicans in the sense that they strive to be sustainable, and be renewable by the voters as long as possible.

    That’s why we all vote green now!

  5. Jim in SC

    ‘As for Obama, he has plenty of time to move in the right direction re: reform, and he also has a team with great command of tools and strategies.’

    Yeah, didn’t Summers help dissolve Glass-Steagall and suppress Brooksley Born’s regulatory plans? He’s obviously the best guy to fix things.


    1. David Mercanus

      I was talking about pure politics, re: the team, Jim. There is plenty of time to change policy.

      I’d like to re-emphasize in the “real estate” of this new comment the need for public financing of campaigns and the end of small-state over-representation in the Senate are key. But campaign finance is paramount. We need a large national grassroots movement to do it.

  6. Jolt

    until the us population commits to publicly financed campaigns there will be no change.

    unfortunately americans like the free ride and will never commit to paying for it (they are even a-ok with rich people like bloomberg buying their election wins). therefore the current system where the moneyed interests owns the government will continue. the costs for the average person of this system are largely hidden.

    as they say, you get what you pay for…and if you pay nothing you get just that. nothing.

      1. alex

        I strongly agree with all your points and would like to add that with the amount he collected in bribes (oops, I mean campaign contributions) Obama is the last guy in the world who’ll push for public financing (and will help squash it even if some crazy Democrat in congress tries to push for it).

      2. weinerdog43

        “The Democratic Party is the party of the money”

        Well, if that is the case, the Republic Party is the party of nuts. At least Democrats believe in evolution. President Palin?!?!? No thanks.

    1. ndk

      Oh, and regarding as they say, you get what you pay for, the ROI on buying the executive and legislative branch is excellent.

      Buffett joins Goldman bid for Fannie Mae tax credits

      This is wrong in so many ways that I don’t even know where to begin. Conservatorship, bailouts, further reduced taxation on major corporations, I mean… holy hell. Congratulations, Buffett and Goldman, on your puppet government.

  7. MyLessThanPrimeBeef

    Sorry, I should also add that the Republican Party is also not ‘too big too fail.’

  8. EmilianoZ

    The rivalry between Republican and Democratic leaders is like siblings’ rivalry. It can be genuine and fierce but in the end they’ll work for the family.

  9. winterwarlock

    Government and corporation are two sides of the same coin. One carries a carrot, while the other carries a whip. Both take money to pass on responsibility from their constituents to the kids. The loss by incumbants is the story.

    Now, we await Mr. Gates presence at the table. He’s just the face man, and those numbers in the computer accounts are just numbers, but we want everyone at the table.

    The reboot mechanism has already been installed, and awaits the following conditionals:

    everyone who profited from this last demographic ponzi scheme puts everything remaining back on the table;

    government gets out of the business of regulating new family formation;


    everyone on the planet gets access to a proper education, for free.

    Labor gets 51% return on the economy. That’s a law of physics; it’s non-negotiable.

    If the old families want to raise people like cattle, and people are willing to participate, the old families pay for their care.

    If they want a healthcare system to anesthetize their population, cradle to grave, they pay for it. None of the other critters have a healthcare system. We have more brain cells, and we can take care of our own.

    If they want a cradle to grade 12 compliance indoctrination system, while they send their kids off to college to go skiing, they pay for it.

    The governments adopt real accounting systems that seamlessly articulate with corporate accounting systems so real time multiplier effects for all agencies can be measured and published.

    If they want us to work for government or corporation, they pay extra.

    Or, they can consume their entire system trying to reboot that burnt out motor.

    The real problem is not the old families or the corporation. The old families are hard wired by nature, and the corporation operates nearly flawlessly.

    The problem is with rank and file labor members that see their load and walk right by it, with perfect knowledge that government, by democrat and republican gerrymandering, employ misdirection to force that load onto the kids.

    The kids have taken quite a beating over the last two generations, and they now have the tools necessary to measure everything, Internet or no Internet. Do not expect them to be lenient if you do not pick up your load now.

    Everyone wants to ride in the wagon, and eat bon bons. That’s not going to fly anymore.

  10. i on the ball patriot

    It doesn’t matter who wins in 2010 or 2012!

    The system was designed broken — on purpose. There will be no change from within. Face up to it and begin the election boycotts now …

    Book review by Gaius Gracchus;

    “How Democratic is the American Constitution? by Robert A. Dahl

    Dahl’s fine book attacks the American Constitution and system of government for each of the following undemocratic features, some of them unique to the US among the world’s advanced democracies, and all very rare.

    # The Electoral College.

    # A bicameral legislature.

    # Grotesquely unequal representation in the Senate.

    # Judicial review (veto) of acts of the federal legislature, duly signed into law by the President.

    # Judicial legislation (“policy making”) under cover of enforcement of the Constitution.

    # Single member legislative districts with plurality voting (so-called, “first past the post”), contrasted unfavorably with proportional representation and runoff systems.

    # The two party system.

    # A President with important powers wholly independent of the legislature, contrasted unfavorably with the much more common system of ministerial government responsible to the legislature.

    # A strong federal system imposing significant limits on the powers of the general government.

    This is a short book in which, of course, RD does not say all he knows, or complain of every undemocratic characteristic of our system. For example, he does not complain of these, and so proposes no better alternative – however hopeless.

    # Federal judges are appointed rather than elected.

    # Federal judges have effective life tenure.

    # There is no federal recall.

    # There is no federal initiative.

    # There is no federal referendum.

    # Legislation is unduly influenced, and often even written, by lobbyists in service of moneyed interests (RD does allude to this).

    # Millions of America’s mentally competent, non-criminal permanent residents lack the franchise.

    # Tens of millions of America’s people who have the franchise do not vote. (In the words of Sharona Fleming, “It only encourages them.”)

    # There is no “None of the above” option for voters.

    # The means of campaigning are almost wholly within the gift of the rich (RD does allude to this disgraceful fact in one sentence).

    # The means of political propaganda in general, from report and comment in the mass media to the productions of “think tanks,” are almost wholly within the gift of the rich.

    # Holders of high federal office – including judges, legislators, and the President – are nearly all lawyers and nearly all personally members of the wealthiest strata.

    # The legislature has only the slightest real impact on foreign policy in general, and not much even on treaties. It has none on the extra-constitutional device of the “executive agreement.”

    # The requirement of a Congressional declaration of war is not observed and is without effect.

    # There is no popular constraint on, or control over, government – and in reality Presidential – war-making power.”

    On the streets — now!

    More here;

    Deception is the strongest political force on the planet.

  11. emca

    The changes of a successful third-party run at this time are nil and zero. The public sentiment is perceptibly less motivated toward this kind of candidate than Ross (the boss) in 1992.

    As stated above, money’s where its at. The liberal have their rich, latte-drinking set, conservatives have their stodgy, balding old men of boot-strap ideology and both parties have the money changers ready to support whoever or whatever works to their financial advantage.

    The populace is freelancing along from one fashion to the next, first D then R then back again in one spiraling convolution of salvation – downward.

    One another note, the currently elected governor of Virginia appears to have won the race not based on Conservative ideology, but on a dogged interest in local concerns, whether it was Lyme disease in one county and issue of Guantanamo in another. Don’t know if Mr. McDonnell can or will follow through and keep his more Conservative views and political ambitions on the back burner as would be necessary to affect a responsive, effective regional government; one can always hope.

  12. Valissa

    Markos is a political sellout… why anyone listens to him anymore is beyond me. Daily Kos used to be a diverse place where even independents like me were welcome, but the purges began once Obama became Markos’ choice. Dissent not allowed (Eric Hoffer’s classic “The True Believer” was very helpful in explaining this phenomenon). I was pretty sure that Obama would end up being exactly the medicore president he is now because I paid attention to the evidence (his actual political history and resume). I finally figured out that Wall Street chose hime with the express purpose of “neutralizing” labor/the left/progressives and he has done that very neatly indeed. I’m somehwat surprised the right hasn’t been gloating about this more. It’s really hilarious that anyone thinks Obama is a socialist… he is an ambitious opportunist who will go wherever the winds of power push him.

    I now view mainstream politics the way I do professional wrestling and while I remain an idealist in my personal life I have become very realistic in terms of political power and how it’s being wielded in the American Empire today. I’m working on seeing the humor in it all, and sometimes am more successful than others.

    Since the Republicans have imploded and are in the midst of an identity crisis, the Democrats will probably get away with being spineless corporate shills for longer than I would like. Sadly politics and economics have both become very “religious” and civil discourse about the pros and cons of various worldly problems has gone by the wayside.

    1. charcad

      Markos is a political sellout… why anyone listens to him anymore is beyond me. Daily Kos used to be a diverse place where even independents like me were welcome, but the purges began once Obama became Markos’ choice. Dissent not allowed

      The exact same thing occurred years ago with Jim Robinson and “Free Republic” for peon level conservatives. He became a front for the RNC, probably at the behest of Forbes money. The bannings swiftly followed.

      Look hard, you’ll soon find Markos’ paymaster embedded in the BO machine.

  13. burnside


    The common expression is ‘reined in’. If you think of yourself, reins in hand, astride galloping credit default swaps, you’ll be in the picture.

    Your posts are much appreciated – do forgive a grammar nazi moment.

  14. kwark

    So, let me get this straight. . . we’re experiencing the current mess because of 30 years of “bipartisan” de-regulation and ever-increasing corporate dominance of both parties. So, after 1 year of disastrous Democratic “leadership” following immediately on the heals of an especially disastrous 8 years of Republican “leadership” the public is itching for more Republican “leadership”? I don’t get it. I suppose. . . after all, talk-radio and the networks define the acceptable, pathetically narrow, scope of political discussion in the US.

  15. phil_hubb

    If the DJIA is above 12k and home prices are rising they’ll get re-elected.
    If it’s not, they won’t.

    All anyone really cares about is recouping their losses.

  16. rdp

    Systemic financial reform is THE # 1 issue for this country. Everything including jobs, healthcare, military might etc all hinge on this.

    Consider that the terrorists led by Osama cost us a few billion dollars along with a few planes and a building and a few thousand lives. Then consider the true terrorists which are the corrupt banks and politicians. Trillions of dollars have and will be lost, millions of lives upended. And the corrupt financial industry and politicians are setting the stage for repeated busts. The only difference is that the financial industry destroys lives for money and the terrorists do it for their religion. But as for who’s far more destructive, the financial industry takes the cake and eats it too. External terrorists could never dream of achieving such havoc on the American society. The true terrorists are the ones who are destroying this country from within in the name of this Country.

    Kos is right. I voted Democrat last election. I’m voting Republican. I know I’ll be bent over and raped but I won’t be lied to.

  17. Bill

    The answer to your title question is, IMHO, YES.

    Here is part of the letter I sent to my Democratic Senator, Mark Warner, this morning:

    I believe that President Obama has surrounded himself with the very people who were largely responsible for this economic debacle. I am far from the only one who sees what’s currently taking place as the implementation of the same old strategies initiated by the Bush administration, largely aimed at supporting a corrupt banking sector that is riddled with fraud that is leading to this great country’s downfall.

    I implore you to draw the President’s attention to the remedies outlined here, so that we Democrats can continue to help make this country great again.

    Here is what needs to be done to remedy this situation, IMHO:

    1. Replace the Treasury Secretary immediately with someone untainted by long association with the banking sector. William Black or Joseph Stieglitz would be excellent choices.

    2. Have that person advise on replacing all current financial regulatory personnel, including Sheila Bair. Staff and fund the SEC properly, and give them prosecutorial powers so they can properly monitor Wall St. activities and prosecute criminal fraud.

    3. Support the movement to audit the Federal Reserve and replace Ben Bernanke with someone recommended by the new untainted Treasury Secretary.

    4. Urge Congress to reinstall the Glass-Steagall Act that protects taxpayers from the ravages of unchecked Wall Street greed, and if they won’t/can’t do that, create an executive order that has the same or similar effect.

    5. Move immediately to close any current financial institution deemed Too Big to Fail, and prosecute all those who have engaged in fraud in those and other institutions, as did William Black during the Savings and Loan crisis back in the 90s.

    If all these steps are taken, the American people who elected the current President would likely re-elect him again, and also, the Congress will keep a Democratic majority next year during the mid-term elections.

    Moreover, and just as important, the American people’s faith in this government and this President will be restored.

    If the administration continues on the current path without these changes, I and many others will be voting out all incumbents next year, including yourself and Senator Webb. The last time I voted Republican was during a straw poll at my hight school in 1960, when I was a junior. If your opponents are too distasteful for me to vote for them, I will simply abstain.

    The People have spoken once again (we also spoke during the TARP voting, but were ignored), and our voices are getting louder. If Democratic politicians ignore this warning (i.e., the recent elections), our voices next November will be deafening.

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