Obama’s Fatal Ambivalence About Wall Street: Convention Edition
When the history of the 2012 election is written, the way Democrats chose to fund their convention will take up exceedingly few (okay, no) words. But it turns out to be a useful window onto the problems the White House has sometimes made for itself.
For those who aren’t familiar with the mini-soap opera surrounding the convention, it goes something like this: When planning the event, Team Obama decided to ban corporate contributions—normally the bedrock of convention financing—and limit individual contributions to $100,000. Right away, Obama’s biggest fundraisers were annoyed: They were already killing themselves to raise money for the re-election campaign. Now they had to spend time chasing convention cash in smallish increments—money people are naturally reluctant to give since, let’s be honest, there’s no glory in writing a check to the “Charlotte in 2012 Convention Host Committee.” One Obama fundraiser, noting that the same rules applied for Obama’s inaugural festivities, groused to me about “Axelrod’s brilliance in reprising the worst fundraising experience of my life: the inauguration committee.”
Fortunately, it turned out there was an exception to this strict fundraising regime: in-kind contributions from corporations—computers from Hewlett-Packard, software from Microsoft, photocopying services from Xerox. According to their own rules, Democrats could solicit as many of these goodies as they wanted, which turned out to be critical. Because the convention planners soon realized it was going to be damn-near impossible to meet their $36.6 million target any other way. “They couldn’t make the convention work without [corporate] support,” says one executive at a major bank. “The DNC then tried to come up with all kinds of alternative ways—they approached us about alternative ways to contribute.” (Note: I have emailed a convention official for comment and will update if I get a response.)
At this point two more problems arose. First, corporations, having been told the party wanted to avoid the taint of their contributions, were in no mood to pony up. “We said no,” says the bank executive. “I would respect it if they stuck to [their rules]. … But don’t come up with rules that make you feel more virtuous and then think about all these loopholes.” Second, the in-kind contributions brought their own risk of PR fiascos—fiascos that surely did more political damage than simply accepting corporate money in the first place. The most infamous occurred in May, when the DNC returned $50,000 worth of gift cards from Wal-Mart after organized labor complained.
There were, in a nutshell, only downsides to raising convention money this way: Obama ticked off his fundraisers, he somehow managed to alienate corporate interests more than he already had, and he drew attention to the Democrats cash-hustle for an event whose financing would have otherwise gone unnoticed. (When was the last time you voted for a presidential candidate based on how he paid for his convention?) It reminded me of joke Tim Geithner used to tell about the administration’s handling of the financial crisis: “We managed to overachieve along every dimension of people hating us.”
Which brings me to the point: One reason (among many, to be sure) that Obama faces such a close re-election is that he could never quite figure out how he felt about corporate America generally, and Wall Street in particular. Obama wanted to be noble (that is, actually reform the financial system) and popular (hence “I didn’t run for office to be helping out a lot of fat cat bankers”), but also to be deemed reasonable by the masters of the universe and to keep raising money on Wall Street. These are probably barely compatible goals in the best of times, but they’re surely incompatible after a once-in-a-century financial crisis. More likely, as Geithner dryly observed, you just piss off everyone.
Given that, the one lesson I would have liked the White House to learn these past four years is that you’re often better off picking a side and sticking with it, at least on an emotional issue like the banks. And, in fairness, I think that lesson’s largely been assimilated. (Suffice it to say, the Obama campaign hasn’t exactly gone out of its way to be solicitous of Wall Street this election season.) But every now and then you see something like the convention goof-up and it gets you wondering all over again.