The For the People Act would loosen the financial industry’s grip over our political system.
Wall Street has been making huge investments — not in businesses or stocks, but in the American political process. At nearly $3 billion, the financial sector spent record sums on campaign contributions and lobbying during the 2019-2020 election cycle.
Wall Street has one goal: to maximize profits. By using wealth as leverage, Wall Street wields immense power over the electoral and legislative processes, to the detriment of ordinary people and American democracy. One part of the answer to this problem is pending legislation to reinvigorate the laws that underpin our self-governance.
The financial sector’s political spending skyrocketed by 50 percent between the 2015-2016 and 2019-2020 election cycles, culminating in $2.9 billion spent in the past year, according to a recently released report from Americans for Financial Reform. The highest spender on Wall Street, Blackstone CEO Steven Schwarzman, spent more than $33 million alone on campaign contributions during the last election cycle.
With individual donations and PAC contributions, corporations and Wall Street donate to win influence. It is also the third-highest industry spender on lobbying activities, with nearly $1 billion on lobbying in 2019-2020.
Wall Street’s political spending underscores the urgency to pass the For the People Act, legislation that would diminish Wall Street’s grip by matching donations up to $200 at a rate of 6:1 with public funds and enabling party committees to open small-dollar donation accounts with fewer restrictions. It would also increase restrictions on large PACs, like the ones used by financial sector tycoons. By empowering small-dollar donors and reining in billionaires, we can reduce Wall Street’s political influence.
For Wall Street, spending massive sums on lobbying and campaign contributions is a highly calculated decision. Wall Street wants to derail financial regulation and keep low tax rates. It needs friendly legislators to do it, and it has something they want: money.
During the past two decades, around 90 percent of House elections were won by the candidate in the race who spent the most money, according to data from the Center for Responsive Politics, giving candidates great incentives to pander to wealthy donors.
Wall Street’s political spending has helped create a crisis for democracy. Most Americans who donate to campaigns can only afford to give small sums, meaning that they do not exert the same level of influence over their elected representatives as wealthy donors. When representatives feel indebted to the financial sector, the Wall Street agenda has an immediate advantage in the halls of Congress.
The wealthy have their own priorities, which are typically opposed to the needs of most Americans. Individuals in the top fifth of the income distribution have on average more conservative economic views, especially regarding taxation, regulation and welfare spending. A majority of the public, however, believes the government should guarantee access to basic needs and support increasing the minimum wage and funding to social security and health care.
Consequently, Congress’s cozy relationship with Wall Street donors has subverted popular economic policies. There is broad bipartisan support for consumer protections, with 91 percent of Americans believing it is important to regulate financial services. Over two-thirds of Americans support a wealth tax on billionaires, 75 percent of Americans support eliminating the disparity between the tax rate for earned and unearned income, and 70 percent of the public wants to increase corporate taxes by eliminating deductions.
Yet none of these policies have become law. Instead of prioritizing economic justice, over the past several decades, Congress has passed tax cuts for the wealthy and bailed out Wall Street in 2008. Congress’ priorities have become Wall Street’s priorities.
The financial sector gets returns on their investments. Between 2007-2009, six out of the eight corporations that spent the most money on lobbying saw a seven percentage point decline in their tax rate compared to the 0.2 percent decline the median spending company received. As a result, political scientists Jacob Hacker and Nathan Loewentheil write that these large corporations saved an “estimated $11 billion — which, if entirely due to lobbying, would indicate a return on investment of over 2,000 percent.” The wealthy seek policies that make them richer, creating a cycle of political and economic inequality.
Corporate money in politics drives corruption and harmful outcomes for workers and taxpayers. Financial sector titans continue to use their money to influence politicians and ensure there are fewer limitations to their profiteering in the future. The policies they push for expand inequality, dismantle the social safety net and undermine the common good. Our unequal economy is in part the logical result of a campaign finance system that privileges the wealthy at the expense of ordinary people and American democracy itself.
The For the People Act isn’t a panacea, but it’s an important start towards restoring balance to our political system.