Tuesday night’s Democratic primary debate revealed that Hillary Clinton will almost certainly be the Democratic nominee for president in 2016 and that her moderate-to-left-of-center views on the economy and government regulation are the only ones that should be taken seriously by Wall Street. The more radical views coming from her rivals, which include everything from a government-led break up of the largest U.S. banks to reinstatement of the depression-era Glass-Steagall law, should be ignored.
Clinton’s rivals treated her mostly with kid gloves during the first Democratic debate, allowing the former secretary of state to easily navigate around the multitude of character-assassinating land mines that lay in her path.
Bernie Sanders, the senator from Vermont and Clinton’s only real challenger in the polls at this point, cut her some serious slack last night, deflecting attention away from the controversy surrounding her use of a private email server when she was the nation’s top diplomat.
“The American people are sick and tired of hearing about your damn emails,” Sanders grumbled to cheers from the partisan audience, for which Clinton responded, “Me too! Me too!”
When Martin O’Malley, the former governor of Maryland, thanked Clinton and her husband, former President Bill Clinton, for their service to the country, he also noted that it may be time for some “new leadership” in Washington (i.e. him). The backhanded compliment gave Clinton the opportunity to highlight all her experience, while also being able to refute claims that she is part of some political dynasty, noting that she would not ask anyone to vote for her, “based on my last name.”
Such easy handling of Clinton by her supposed rivals may not be the smartest thing to do this early in the primary game. After all, it only takes one of those proverbial land mines (and there are a lot of them out there) to go off to severely damage Clinton’s candidacy, while wiping out her party’s chances of securing the White House next year.
Despite the risks, the Democratic party seems to be falling in line behind Clinton, who clearly used Tuesday night’s debate to affirm that she was the race’s “establishment” candidate, the one who supports the party line. This is the opposite of what is occurring in the Republican primaries, where outsiders, like Donald Trump and Ben Carson, are currently crushing Republicans viewed as “insiders,” such as Jeb Bush. The Republicans are currently in inter-party turmoil, so it makes sense that the GOP is having trouble controlling itself.
But the same can’t be said for the Democrats who, despite being the minority party in Congress, are far more put together than their Republican rivals. Being the establishment candidate may make Clinton seem boring but it all but ensures that she will be her party’s candidate in 2016.
To be sure, Clinton has made a dash to the left in recent weeks in a bid to appeal to the more liberal wing of her party, but her status as the establishment candidate should calm investors as she is clearly not interested in rocking the boat.
The details of her economic agenda, revealed last week, nevertheless contain a number of things that could potentially hurt Wall Street and the markets, such as the establishment of a financial transaction tax, which would put the brakes on high frequency trading, or pumping up the government’s ability to break up the banks it feels are in trouble.
The first issue, the financial transaction tax, is nothing new and has been on the liberal wish list for over a decade now. The chances it will ever see the light of day is pretty much zero, and Clinton and the Democratic party know that. Meanwhile, Clinton’s support for the government’s ability to break up banks is pretty much already the law of the land. The FDIC was granted authority under the 2010 Dodd-Frank Act that allows the agency to seize and dismantle any financial firm that it believes would pose a significant threat to the financial system if it were to fall into bankruptcy.
During the debate, Clinton claimed her economic plan was tougher on Wall Street than those proposed by her Democratic rivals because it targeted the “shadow banking” sector, as in those non-bank financial institutions that can have a major impact on the health of the financial system. Sanders said Clinton’s claim was simply “not true,” and he is correct. Sanders supports reinstating Glass-Steagall, a law put in place after the Great Depression that separated commercial banking from investment banking activities. Reinstating that law would have a profound impact on the way banks operate today and would limit the systemic worries that accompany a bank collapse.
But while Clinton’s economic plan may not be as severe as those touted by her rivals, it didn’t have to be over-the-top to win over the base, most of whom have no idea what the “shadow banking” sector is or what Glass-Steagall even means. The important thing is that she established that her policies were firmly in line with those of the Democratic party, which many primary voters will interpret as being important next November. This all but ensures that Clinton will receive the necessary funds and support to crush her straw man rivals and take her candidacy to the next level.