A Specter is Haunting Wall Street

Wall Street must have finally figured out that Elizabeth Warren will be the likely winner of the Democratic Party nomination because a piercing bestial wail has gone up in the last couple of weeks, one that coincides with a Buttigieg boom. According to Kate Kelly and Lisa Lerer in "As Warren Gains in Race, Wall Street Sounds the Alarm":

Interviews with more than two dozen hedge-fund managers, private-equity and bank officials, analysts and lobbyists made clear that Ms. Warren has stirred more alarm than any other Democratic candidate. (Senator Bernie Sanders, who describes himself as a socialist, is also feared, but is considered less likely to capture the nomination.)

Wall Street has long tried to influence American politics and generally donated to both parties, though it traditionally has been more aligned with Republicans. But while there’s no coordinated strategy, the industry is more or less united against Ms. Warren. With just months before the first voting begins, it is unleashing a barrage of public attacks, donating money to her rivals and scrambling to counter her blistering narrative about Wall Street.

“Everyone is nervous,” said Steven Rattner, a prominent Democratic donor who manages the wealth of Michael R. Bloomberg, the former New York City mayor. “What scares the hell out of me is the way she would fundamentally change our free-enterprise system.”

While even some of Ms. Warren’s detractors see her soak-the-rich approach as a winning issue in the Democratic primary, President Trump and his team would undoubtedly try to weaponize it against her in a general election. Already, some Republicans are defining Ms. Warren as a veiled socialist who would disrupt the fragile economy with her sweeping plans.

As president, Ms. Warren would also confront a long list of powerful and well-funded opponents on Wall Street, potentially complicating her ability to enact her agenda. Her tightly organized campaign has no Wall Street liaison or circle of advisers drawn from the industry and has done little outreach to the finance world.

Yet even if Ms. Warren cannot get some of her more far-reaching proposals through Congress, finance executives fear that as president she would appoint regulators who take a far stricter view of the industry.

Ms. Warren’s campaign declined to comment, pointing to her public remarks, in which she has welcomed doing battle with Wall Street.

In recent weeks, Wall Street’s warning signals about Ms. Warren have begun exploding into the public, coloring analyst reports and earnings calls, and echoing from the stages of industry conferences. The billionaire money manager Leon Cooperman castigated her in an open letter released Thursday, and on Friday Goldman Sachs researchers suggested that tax hikes proposed by Ms. Warren and others could lower corporate earnings by 11 percent.

Prominent money managers have predicted a double-digit decline in the stock market if Ms. Warren wins the presidency, a claim that some skeptics find hyperbolic. Some traders and investors have said, only half-kiddingly, that they’ll leave the country — or at least, relatively high-tax states like New York — to minimize the impact of what they view as punitive policies.

With the presidential election one year away it is clear that the real contest will not be Warren versus Trump but Warren versus Wall Street. As Kelly and Lerer note, Watt Street's preferred candidates are Buttigieg and Trump:

Ms. Warren also ranks well down the list in money raised from individual donors in the finance industry. She has raised about $330,000, according to year-to-date figures compiled by the Center for Responsive Politics, far less than Mr. Buttigieg, who leads the Democrats with nearly $1.3 million. (At about $1.5 million, Mr. Trump is the biggest beneficiary of finance-industry donations.)

In her presidential campaign, Ms. Warren has eschewed donations from corporate PACs and bundlers, swearing off big donor events as she collects a flood of small donations that have put her among the race’s leading fund-raisers. Last month, her campaign announced that they would no longer accept contributions of more than $200 from executives at big banks, hedge funds or private equity firms.

To understand why Warren is shaping up to be a radical, transformative figure, all one need do is read about how she proposes to finance her Medicare For All plan (see Margot Sanger-Katz and Sarah Kliff, "Elizabeth Warren’s ‘Medicare for All’ Math"):

• Employers would be required to pay fees to the federal government, equivalent to 98 percent of what they now spend on their employees’ health care. Some companies would be exempt, and companies with unionized work forces would be able to lower this payment if they increased workers’ wages. Currently, companies vary greatly in the cost and generosity of their health benefits, so this fee would vary substantially by firm. ($8.8 trillion)

• States and local governments would be required to make payments to the federal government, similar to what they currently spend on government employee benefits and their share of Medicaid expenses. ($6.1 trillion)

• Corporate taxation would be increased. ($2.9 trillion) 

• Tax collections would increase through improvements to I.R.S. enforcement, which Ms. Warren believes could raise a lot of money. ($2.3 trillion)

• The top 1 percent of individual earners would pay new taxes on their capital gains; they would pay taxes on increases in investment value annually, instead of waiting until assets are sold. ($2 trillion)

• Income tax collections would increase, since workers would no longer pay part of their salaries for insurance premiums, which are not taxed now. ($1.4 trillion)

• Billionaires would pay a higher wealth tax than the rate Ms. Warren has previously proposed: 6 percent, up from 3 percent. ($1 trillion) 

• A new financial transactions tax would be imposed on stock trades. ($800 billion) 

• Pentagon spending from an overseas contingency fund, often criticized as a slush fund, would be eliminated. ($800 billion)

• Income earned by immigrants, following the passage of her immigration overhaul plan, would provide new tax revenues. ($400 billion)

• A risk fee on the liabilities of banks with more than $50 billion in assets would be introduced. ($100 billion)

It's the most radical, substantial attack on the U.S. oligarchy by a viable major-party presidential candidate in my lifetime.

So what is Wall Street going to do?

First, the financial industry will keep doing what it has been doing: scaremongering and funneling money and media attention to Mayor Pete.

The problem for Wall Street is if they are seen as the source of the attacks the attacks will actually boomerang. That's how unpopular Wall Street and its neoliberal political creed are. I'm sure right now a suitable cutout -- small farmers, public housing mothers -- is being hunted up to deliver the anti-Warren message.

Another problem for Wall Street is that its preferred candidates -- Kamala Harris, Cory Booker, Amy Klobuchar -- are all unpopular with voters. This leaves Joe Biden, who is not viable, and Pete Buttigieg, who is not electable.

Buttigieg's principal shortcoming in the Democratic primary is that black voters don't trust an LGBTQ Harvard elite who as mayor can't even control his own police force. Young people don't trust him either, while older voters who support Biden are just as likely to transfer their allegiance to Warren because Mayor Pete makes loves to a man.

By early March, if Wall Street can't somehow transfer all of Biden's supporters to Buttigieg and Warren and Sanders are left standing tall, the Democratic National Committee will do everything in its power to hobble its front-runners, and Mike Bloomberg will begin his quadrennial talk of a third party challenge.