We are suffering through a political comedy and economic hell that has resulted in the United States of America being downgraded by Standard and Poor's.
ExxonMobil has a AAA rating. The United States does not. When someone noted that Babe Ruth's pay was higher than President Herbert Hoover, the Babe replied "I'm having a better year." ExxonMobil can certainly make the same boast as Babe Ruth. ExxonMobil reported a profit of $10.7 billion in the second quarter. The United States is hurting big time, especially on Main Street America where I live and work.
None of the recent debate has been about the things that matter to Main Street: getting people back to work and helping small business get financing.
Somewhere along the way, Washington and Wall Street stopped talking to Main Street. People often try to pinpoint when the disconnect started.
I think I found it. When political consultants came into power during the 1970's.
In 1982, Professor Larry Sabato at the University of Virginia wrote an influential book, The Rise of Political Consultants.
Sabato discussed how technology like political polling, targeted direct mail, and sophisticated media purchases allowed candidates to run for office without the support of a political organization.
A potential candidate didn't have to spend years knocking on doors, stuffing envelopes, and working his way up in a political organization. All they had to do was raise enough money to hire well-trained consultants who could execute an image and message that voters would buy.
Robert Kaiser nailed it in his book, So Damn Much Money: The Triumph of Lobbying and the Corrosion of American Government. Main Street is not being heard in Washington.
To paraphrase Vince Lombardi, after the advent of political consulting, raising money wasn't everything, it was the only thing.
There is no easier place to find money than on Wall Street.
Washington could go to Wall Street and come back with sacks of money. Wall Street could get Washington to do things that would let them make more money. That meant Wall Street could increase campaign donations and lobbying money back to Washington.
It seemed like the game could go on forever, until everything crashed in 2008 As Joe Nocera and Bethany McLean noted in their bestselling book, All The Devils Are Here, the combination of risk taking by Wall Street along with legislative changes and lax regulation by Washington contributed directly to the crash.
Some people are looking for a political solution. I really don't see one. As soon as things died down, politicians headed back to Wall Street because "that is where the money is." Changing in campaign finance has been an exercise in futility. Concepts, like public financing and campaign spending limits have been tried and ultimately shelved. Whenever a new law is passed, political fundraisers eventually find a way around it. The result is that Wall Street keeps sending money to Washington. Since the rise of 527 organizations and no cap on corporate contributions, the money is bigger and more secretive than ever.
I spent my post-college years heavily involved in politics. Most notably, I was an assistant state coordinator for Al Gore's 1988 presidential campaign. I watched many good people get into elected office. Most get into public life wanting to make a difference. All of them eventually learn one thing: the art of getting re-elected.
People who spend their lives in elected office are very good at staying there. Just like you and me, they want to hang on to a career they worked hard to earn.
Congressmen understand what it takes to keep 51 percent of the voters happy. With the rise of the Tea Party Movement and a bad economy, there was talk of big election changes in 2010 but over 85 percent of Congressmen and 84 percent of Senators were re-elected.
Opensecrets.org tracks Congressional elections back to 1964. At no time since then has the re-election rate in the House of Representatives been under 80 percent. In several years, (1986, 1988, 1998, 2000 and 2004) 98 percent were re-elected.
Since 1980, when a number of Republicans rode the coattails of Ronald Reagan's presidential victory to defeat long-time Democrat incumbents, there has not been a year when the re-election rate in the United States Senate has been less than 75 percent. In two years (1990 and 2004) the re-election rate was 96 percent.
If someone is looking for a solution for the problems in Washington and Wall Street based on "throwing the bums out," in Congress, the odds of success are very slim.
No matter what political party is in power, Wall Street manages to have its own people on crucial Congressional committees, in cabinet-level positions, and in almost any bureau that might attempt to regulate them.
Jesse Unruh, former Speaker of the California State Assembly, once noted that money is the "mother's milk of politics." In a media and consultant-driven system, it is even more so.
For many years, Kentucky had an influential congressman named William Natcher, who rarely campaigned and never raised money. He died in 1994.
It would be very hard to elect another William Natcher now. A person who could raise big money to fund a poll-driven message and good television ads would defeat him.
The influence of big money on Washington is not going away soon. There is not a viable way to replace it.
I don't advocate marching in the streets or writing a letter to your congressman. Your congressman's pollster has already told him what you are thinking about before you write it.
A better form of protest is to set up your own finances in a way that reduces the influence of Washington and Wall Street on your life.
For many years, the two parties were the Democrats and the Republicans. Now I view it as people who depend on Wall Street versus people who don't depend on Wall Street.
In my upcoming book, Wealth Without Wall Street: A Main Street Guide to Making Money, my suggestions are non-partisan in the traditional sense.
First is tear up your credit cards. The concept of reducing debt and getting rid of credit cards is frequently advocated by conservative radio host Dave Ramsey. Since almost all credit cards are issued or serviced by Wall Street, not having a card, or reducing its use, means "what's in your wallet" won't ultimately fund part of a million-dollar bonus package for some Wall Street executive.
Second is to start working towards is a concept both political parties tout in some fashion. Self-employment can be a tough life, with an unsteady income. It can be harder to get good medical or retirement benefits, but the independence and opportunity for success is worth it for many, like me.
I can go broke, but I can never be fired or laid off as part of a "corporate restructuring." There is a certain comfort in that.
Move Your Money is a concept that Arianna Huffington, a progressive, developed, but it makes a lot of sense for anyone outside of the Wall Street sphere of influence. I like local banks for the service, personal connection, and the ability to keep money circulating on Main Street. The fact that banking locally reduces the power of Wall Street is a bonus.
Most Americans agree with the theory of "get rich slowly," even while many buy lottery tickets or go for risky investments. They understand that money does not come easily even though they are tempted to go for a quick fix.
When it comes to casino-style gambling, with other people's money, no one does it on a bigger scale than Wall Street. They just call it "trading" or "investing" instead of gambling. A good example was the trading of mortgage-backed derivatives, which hugely contributed to the financial crash. It was obvious in books such as Michael Lewis' The Big Short that few people understood derivatives. Especially those who sold them.
If people move their money away from Wall Street, it might force Wall Street to get back in the business it used to do well, helping finance and grow businesses.
It will also give them less money to spend on lobbyists and political consultants.
Don McNay, CLU, ChFC, MSFS, CSSC of Richmond Kentucky is an award-winning financial columnist and Huffington Post Contributor. He is the author of the book, Wealth Without Wall Street: A Main Street Guide to Making Money, which will be released on September 20.
McNay founded McNay Settlement Group, a structured settlement and financial consulting firm, in 1983, and Kentucky Guardianship Administrators LLC in 2000.
McNay has Master's Degrees from Vanderbilt and the American College and is in the Hall of Distinguished Alumni of Eastern Kentucky University. McNay is a Quarter Century member of the Million Dollar Round Table and has four professional designations in the financial services.
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