The most important – and often most ignored - issue in the coming election is not health care, taxation, education or even climate change. It is Power: who has it, how it is obtained, who benefits and who loses. Power determines the ability to address or not address all the other issues. I have previously analyzed the process through which corporations dominate our political economy through a system of legalized corruption in which Big Business basically purchases the allegiance of politicians by investing billions of dollars in campaign contributions; obtains favorable legislation by spending billions more in lobbying; and ensures that the legislation is supported by pro-corporate judges who have been appointed by those same politicians (see here, here and here).
This system has allowed big corporations and the wealthy elite to dominate our politics over the past 45 years during which they have obtained trillions of dollars through tax cuts, deregulation, unfair trade deals and the privatization of public assets. Simultaneously, they have prevented the passage of pro-worker and consumer legislation. This system of corporate domination has prevailed with bi-partisan Congressional majorities under both Democratic and Republican presidents. Big corporations, especially Wall Street, will invest hundreds of millions of dollars during this election to ensure that their domination continues into the future.
In this and a number of future articles, I will examine specific presidential candidates not in terms of the liberal, moderate or conservative labels but in terms of their relationship to the U.S. power structure: who supports and funds them, whose power is increased or decreased from the policies they espouse, and whose interests they have in the past and will in the future actually represent.
Wall Street plays a significant role in the overall economy as it basically controls the Federal Reserve which, by setting interest rates, has more power over the general economy than any president.
Wall Street is probably the most powerful sector in the corporate economy. Wall Street plays a significant role in the overall economy as it basically controls the Federal Reserve which, by setting interest rates, has more power over the general economy than any president. Wall Street also influences the decisions of all other major corporations. Corporations rely on Wall Street in order to market stocks and bonds and obtain various loans. But it goes much deeper: the concerns of Wall Street can alter the behavior of even the largest corporations.
AT&T provides a cautionary tale. This gigantic corporation was forced by a vulture hedge fund to buy back $30 billion of its own stock in order to artificially increase the stock price and, not coincidentally, the value of its corporate officers' stock options. Concurrently, AT&T eliminated 37,800 jobs and reduced its capital expenditures by $1 billion. Moody's, the credit rating agency stated that the large cost of the buyback could put AT&T at risk for a credit downgrade. Not surprisingly AT&T is still being rewarded with a $42 billion tax cut even though it is cutting jobs and investments. Wall Street also has cemented its dominance of our political system by investing $6.53 billion in their chosen political candidates from 1990-2019, an additional $8.94 billion in lobbying these same politicians and by utilizing a well-known revolving door between Wall Street lobbyists and key staff and elected positions in Congress and the Executive Branch. For example, just in 2019, the entire financial capital sector as a whole (Finance, Insurance and Real Estate) employed, 2,348 lobbyists of which 1,430 or 61% were former Congressional staffers or elected officials or White House staffers.
The following analysis will examine Pete Buttigieg not in terms of his "social" or "cultural" policies but in terms of his relationship to Big Business, especially Wall Street. Does he and will he support Wall Street or Main Street?
BUTTIGIEG, BIG BUSINESS AND WALL STREET
Former Mayor Pete Buttigieg is often portrayed as a non-ideological but high-minded pragmatist who will do well with Middle America and pass progressive legislation with the support of "Republicans of conscience." He is also seen as the representative of a rising generation, a Washington outsider who provides a new perspective, and a trailblazer as the only openly gay candidate. He has garnered a lot of support from many establishment political pundits. For example, a number of NY Times columnists have praised Buttigieg. David Brooks states that "Buttigieg's secret is that he transcends many of the tensions that run through our society in a way that makes people on all sides feel comfortable." Brooks column is titled "Why you love Mayor Pete…Buttigieg detaches progressive politics from the culture war." Frank Bruni, though concerned with Buttigieg's age and lack of managerial experience, stated "He routinely steers clear of extremes—on health care, on guns, on environmental issues - not because he lacks conviction or courage, at least not from where I'm sitting, but because extremes aren't where the most progress is usually made or where healing is likeliest to happen. He's a champion of the sensible. In that way, he seems much older than his age."
Do these characterizations of Buttigieg stand up to a more detailed, substantive analysis? Who is the "real" Pete Buttigieg? As mayor of South Bend, Indiana, Buttigieg did not have a voting record on national policy issues. Therefore, his future policy positions and allegiances must be discerned from his practices as mayor; the major contributors to his past campaigns for mayor and current presidential campaign; and his policy pronouncements.
As the following analysis will reveal, Buttigieg has carefully reassured Big Business and Wall Street that he is on their team especially in relation to his history of rewarding big donors with large government contracts; appointing key staff with ties to the financial and high-tech sectors; changing positions/statements on health care policy and Electoral College reform in response to Wall Street and Big Pharma pressure; support for pro-business Supreme Court appointments; support for the privatization of public education; relying on billionaire donors especially from the financial, high tech and pharmaceutical sectors; and, accepting contributions from known union-busting law firms. The conclusion: While Buttigieg is socially liberal, he is pro-Big Business, pro-Wall Street in relation to economic policy.
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Follow the Money: Buttigieg Relies on Contributions from Wall Street and Billionaires who See Him as An Alternative to Sanders and Warren. According to the Center for Responsive Politics, the capital finance sector (classified as Finance-Insurance-Real Estate) contributed $4.18 million to Buttigieg in 2019. Communications and Technology formed the second largest business sector contributor with $3.6 million. Major sources of contributions include individuals tied to Alphabet (Google), Microsoft, AT&T, Disney, Comcast, Wells Fargo and Bank of America.
Buttigieg is also a favorite among billionaire donors. An analysis by Forbes found that Buttigieg obtained donations from 40 billionaires. Thirteen of these gave exclusively to Buttigieg's campaign "by far the most of any Democrat running for president." Forbes goes on to state, "More than one third of Buttigieg's wealthy benefactors got rich in finance and investments."
Wealthy individuals also act as bundlers who aggregate the contributions of multiple donors. The minimum contribution to qualify as a bundler is $25,000. Buttigieg lists 180 bundlers on his website. According to a report from the Center for Economic and Policy Research, 54% percent of his total bundlers are tied to the FIRE sector including 39% from Finance-Insurance (the largest source of bundlers) and 15% from Real Estate (the second largest source of bundlers). At a minimum, the FIRE sector bundlers raised at least $2.35 million. Sixty-eight or 39% are tied to the financial industry. The report also shows that while Buttigieg likes to tout his support from rural and suburban voters, 59% of his big money support comes from New York, Chicago, California and Washington DC.
Buttigieg has only begun to tap the billionaire donor class. Following his good showing in the Iowa caucuses, the Washington Post published an article entitled, "The Finance 202: Pete Buttigieg lures even closer look from Wall Street donors following strong Iowa caucuses performance." The article states, "Wall Street sources say the former South Bend, Ind., mayor, already a favorite of Democratic financiers, can expect something of a Wall Street windfall now after he proved that he has momentum in the chaotic 2020 race." One bundler cited in the article pointed to a "tremendous pent-up supply of donor funds available for a leading Democratic candidate who can coalesce the party… In this community, the more momentum Bernie and Elizabeth get, the more bundlers will start to come off the sidelines. Every day, there's more information that gets traditional New York finance bundlers motivated to get behind someone who can win."
Pay to Play: Contributors to Buttigieg's Campaigns Will Expect to Be Rewarded—As They Have Been in South Bend. An investigative report jointly conducted by the Center for Public Integrity and The Young Turks reached the following conclusions: "Buttigieg's earliest big-dollar campaign bankrollers include numerous lobbyists and prospective government contractors interested in doing business with South Bend, according to campaign finance records obtained by TYT…. South Bend-area contractors, who stood to benefit from doing business with the city, appear throughout Buttigieg's 2011 list of mayoral pre-primary contributors…. Public Integrity and TYT identified a number of them that later ended up getting lucrative business from Buttigieg's mayoral administration."
Another investigative report by Sludge was entitled "After City Incentives, South Bend Real Estate Executives Donate to Mayor Pete's presidential Campaign." This report provided a number of examples including Great Lakes Capital, a private equity firm, that with its connected businesses, obtained a number of subsidies from South Bend for real estate development including $790,000 for a downtown project. For the first quarter of 2019 alone, upper level GLC employees gave $9,000 to Buttigieg's campaign.
These relationships and contributions may not seem like a lot of money from the perspective of a national campaign. However, they are indications to Wall Street and Big Business that Buttigieg addresses the needs of his major contributors and engages in quid-pro-quo politics, i.e., he rewards those who provide campaign contributions.
Buttigieg Has Filled Key Staff Positions with Individuals Tied to Wall Street. Buttigieg has not only obtained significant campaign contributions from Wall Street but has filled key staff positions from individuals with ties to Wall Street. And he has adjusted some important positions as a result.
- Key Staff and Supporters with Ties to Wall Street. Buttigieg has many close ties to Wall Street. His National Policy Director is a former executive from Goldman Sachs and Google. Furthermore, some of Buttigieg's biggest supporters are directly from Wall Street. Here is just one example highlighted in The American Prospect article that deserves an extended quote because it contrasts the interests of Wall Street and homeowners/renters – an issue of special interest to Buttigieg. "One of the most notable financial-industry titans supporting Buttigieg is Tony James, the executive vice chairman of Blackstone, the world's largest private-equity firm. James hosted a fundraising event at his home for Buttigieg earlier in June. Blackstone's interests are opposed to major reforms on many fronts. Any plan to make housing more affordable, for example, will have to contend with private equity's grip on single-family home rentals. Indeed, the UN Special Rapporteur on the right to adequate housing directly called out private equity in general, and Blackstone in particular, for representing a "devastating" force undermining tenants. That James has fundraised for Buttigieg is an indication of his confidence that a President Buttigieg will not hurt private equity's real-estate interests. This does not mean that Buttigieg will fail to address housing affordability; he can still, for example, encourage Congress to increase federal funding for affordable housing, as his "Issues" page promises. Of course, that would not threaten Blackstone's business model." As previously discussed, such a relationship is not new for Buttigieg. When he was mayor, Buttigieg established a symbiotic relationship between his campaign and private equity firms that obtained lucrative contracts while providing contributions to his campaign.
- Buttigieg has been invited to meetings with Wall Street donors as part of their stop Sanders offensive. A New York Times article revealed that Wall Street favors Buttigieg as a realistic alternative to Sanders. "The matter of What to Do About Bernie and the larger imperative of party unity has, for example, hovered over a series of previously undisclosed Democratic dinners in New York and Washington organized by the longtime party financier Bernard Schwartz. The gatherings have included scores from the moderate or center-left wing of the party, including Speaker Nancy Pelosi of California; Senator Chuck Schumer of New York, the minority leader; former Gov. Terry McAuliffe of Virginia; Mayor Pete Buttigieg of South Bend, Ind., himself a presidential candidate; and the president of the Center for American Progress, Neera Tanden (emphasis added)."
Strong Ties to and Key Staff from Facebook, Zuckerberg and Silicon Valley. Buttigieg has deep connections to Zuckerberg, Facebook and Silicon Valley. As reported in the American Prospect, Buttigieg was friends with two of Zuckerberg's roommates, Joe Green, and Facebook co-founder Chris Hughes. Buttigieg has subsequently cultivated many other leading Silicon Valley voices, including a partner (Cyan Bannister) of Trump's biggest tech backer, Peter Thiel (himself Facebook's first outside investor). Senior Facebook executives have donated to Buttigieg's campaign. The Buttigieg campaign also hired two Zuckerberg recommended staffers: Eric Mayefsky, senior digital analytics adviser, and Nina Wornhoff, organizing data manager. These hires followed the highly unusual step of a series of private emails sent by Zuckerberg and his wife recommending specific people for the campaign to hire. Not surprisingly, Buttigieg has criticized proposals to break-up Facebook. After analyzing Buttigieg's relationship with High Tech one commentator for Wired stated: "From Silicon Valley's perspective, Buttigieg is the dream candidate: a change agent who doesn't want to change them."
Buttigieg Changes Positions in Response to Pressure from Wall Street and Big Pharmaceuticals. It is not uncommon for candidates to change their positions during campaigns. But the key question is not only what has changed but also why the changes have been made. In a number of key areas, Buttigieg has changed his positions in response to concerns expressed by major Wall Street and Big Business funders.
- Pressure from Wall Street Has Already Forced Buttigieg to Moderate Some of His Positions. Buttigieg has stopped addressing his proposals to reform the Supreme Court and eliminate the Electoral College in response to pressure from major financial donors. Initially, Buttigieg's proposals for reforming the Supreme Court and eliminating the Electoral College were central features of his campaign – and key pieces of his initial stump speeches. However, the New York Times reports that "Multiple financial bundlers told the campaign that the Supreme Court and Electoral College proposals were not popular, according to people familiar with the discussions. Mr. Buttigieg has since quietly dropped them from his stump speech."
- Pressure from Big Pharma Has Contributed to a Major Change in His Position on Medicare for All. Buttigieg initially supported Medicare for All and ending private health care insurance. However, he has been accused of changing his position on these issues. Buttigieg states that what he really meant was Medicare for All Who Want It – a position that would preserve private health insurance. It is of course interesting to note that the Pharmaceutical/Health products sector has contributed more to Buttigieg than any other Democratic candidate for the Presidency (second only to Trump). Individuals who have given at least $1,000 to Buttigieg's campaign include senior executives at CVS Health, Astex Pharmaceuticals, Anthem Inc. and Ironwood Pharmaceuticals.
Buttigieg Sends Clear Signals to Wall Street and Billionaires that He is On Their Side. Buttigieg has sent important signals to Wall Street and the economic oligarchs that he not only supports them in relation to their own sector but on other issues as well.
- Buttigieg Gets Contributions from Union-Busting Firms. An investigative report in Sludge is entitled "Biden and Buttigieg Take Big Bucks From Union-Busting Lawyers: Attorneys at law firms with notable histories of anti-worker actions have been coalescing around the moderate Democratic presidential candidates." The report states, "These groups include elite law firms and consulting companies with long histories of offering expensive "union avoidance" services to employers looking to squash their worker's organizing efforts among other anti-labor services. Employees of these firms range from associates to CEO's and from low dollar donors to bundlers, but their support of these candidates may hint that the labor policies they expect from a Biden (or Buttigieg) administration are more employer-friendly than what unions are expecting. At the very least, these firms may be looking to influence strategic appointments at Departments and Agencies like the Department of Labor and the National Labor Relations Board, where sympathetic board members can help ensure the firm's clients stay "union free"."
- Support for Moderate/Pro-Business Supreme Court Appointments. In a Cosmopolitan interview Buttigieg praised ex-Justice Anthony Kennedy as an example of judges who can "think for themselves." He said that the justices he would appoint personally under that plan would be more liberal than Kennedy. Ben Mathis-Lilley in his Slate article puts this into context: "a Supreme Court to which Democrats appoint liberals and Republicans appoint conservatives, with throwback Kennedys in the middle, is the same arrangement that produced a number of the outcomes Buttigieg once claimed to deplore. Kennedy himself cast crucial swing votes in Citizens United, in the 2018 Janus decision that dealt a major blow to labor organizing, the 2013 Shelby County decision that killed a key section of the Voting Rights Act" and the Husted decision that supported voter suppression.
- Support for Corporate and Privatized Education. Buttigieg comes down on the side of corporate education policy and privatization. Diane Ravitch issued a stinging critique of Buttigieg's position on education. Ravitch is a Professor of Education at NYU and a former Assistant Secretary of Education under George H.W. Bush. Initially, she was a strong proponent of charter schools and national testing. However, she is now a strong critic of both. She met with Sona Michel (Buttigieg's National Policy Advisor and former employee of Goldman Sachs and Google). Ravitch's conclusion: "Mayor Pete may have many things going for him, but his education agenda is not one of them. If he were president, he would continue the failed Bush-Obama agenda." In terms of specifics Ravitch stated: "It was a frustrating conversation because we were at opposite poles. We disagreed about whether charters are effective, whether they are sufficiently regulated, whether they need more oversight. We disagreed about the value of annual testing. I said that no high-performing nation has annual testing for every child in grades 3-8 as we do. They said I was wrong and cited Japan and South Korea. I corrected them and said those nations have periodic testing, not annual testing. I asked whether their candidate wanted to appeal to the 6% who send their children to charters or the 90% who don't. I did not get an answer."
- Reduce the Federal Debt by Cutting Government Programs. Buttigieg has also taken out a page from the Wall Street preferred policy playbook: point to the federal debt as a rationale to cut social programs. NBC News recently reported that Buttigieg has proposed to reduce the debt. He specifically stated, "It's not fashionable in progressive circles to talk too much about the debt, largely because of the irritation to the way it's been used as an excuse against investment. But if we're spending more and more on debt service now, it makes it harder to invest in infrastructure and health and safety net that we need right now…" The NBC article noted that "Buttigieg hasn't laid out a plan to significantly lower the national debt, which could require steep tax hikes or cuts in cherished programs like Social Security." However, Buttigieg is wrong at the level of economic theory and experience. Paul Krugman, the Nobel Prize winning economist, stated, "Maybe Buttigieg is unaware of the growing consensus among mainstream economists that the deficit hysteria of seven or eight years ago was greatly overblown… Buttigieg is playing into… the [Republican] strategy of hobbling the economy with fiscal austerity when a Democrat occupies the White House, then borrowing freely as soon as the G.O.P. regains power. If Democrats win, they should pursue a progressive agenda, not waste political capital cleaning up the G.O.P.'s mess." It is also interesting that Buttigieg is playing the austerity card when the federal debt service as a percentage of the gross domestic product is much lower now than in the late 1990s when there was significant growth in GDP, jobs and wages. According to the Federal Reserve Bank of St. Louis, debt service was 1.75% of GDP in 2019 – even after the two year impact of the Trump tax cut (that will add $2.289 trillion to the federal debt over ten years according to the Congressional Budget Office). This percentage was 3.04% in 1995 and 2.9% in 1999. It is very interesting how the federal debt becomes a problem when related to government programs including Medicare and Social Security but not when related to tax cuts for the corporations and wealthy or the military budget.
- Work for McKinsey and Company. Former Mayor Buttigieg has issued conflicting reports about his role as an employee of McKinsey and Company, the giant global management consulting firm. When he ran for mayor of South Bend, Buttigieg boasted about his role in turning around a number of Fortune 500 companies. A Washington Post analysis stated: "A review of speeches and interviews that Buttigieg gave when he first pursued public office in Indiana shows that he consistently played up his McKinsey experience, touting work advising "senior decision-makers" and claiming he was "part of billion-dollar decisions made by Fortune 500 companies." The Washington Post article also refers to a 2011 interview with the South Bend Tribune in which Buttigieg stated "I'm the only candidate who has been involved in multibillion-dollar decisions in the private sector, with some of the world's top firms." Now that he is running for president, Buttigieg is downplaying his role at McKinsey especially after he was forced to reveal the companies he analyzed, and it became public that a number of those companies actually laid off thousands of workers as recommended by McKinsey and its analysts. The Washington Post article also refers to a Dec. 10 interview with the Atlantic, in which "Buttigieg painted a picture of himself as a low-level employee locked in a room with a computer, who not only was removed from decision-making power but often didn't talk to his clients' employees or know the outcomes of his projects…When asked if his work had led to job losses at Blue Cross Blue Shield, Buttigieg told the magazine: 'I don't know what the conclusions were or what it led to. So, it's tough for me to say.'" A Vox investigative report into Buttigieg's experience at McKinsey has a sub-heading labeled "The McKinsey scrutiny plays into broader questions about Buttigieg's coziness to power." There are at least two conclusions that can be reached in relation to this entire episode. First, Buttigieg has given two very different perspectives on his time at McKinsey that have served his different purposes when running for mayor and as president. Second, his work for McKinsey is another signal to Wall Street that Buttigieg is on their side.
Buttigieg and his supporters like to portray him as a "change agent." However, he has proven to be a change agent that will not in any significant way challenge the current distribution of power, wealth and income in this country. Given his history, it is no surprise that Wall Street, Big Tech, Big Pharma, Health Insurers, Real Estate Developers and Private Equity have decided to invest millions of dollars into Buttigieg's campaign. And based on past actions, Buttigieg will make sure that investment pays off if he is elected.