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The Democrats' Dirty Money Problem

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Oscar winning director Alex Gibney's latest film, Casino Jack, is premiering in Washington, DC next week, New York last, and San Francisco the week after. The film tells the story of Washington lobbyist Jack Abramoff. It is an extraordinary story that most only vaguely understand. Casino Jack is beautiful and compelling, hilarious in parts, yet deeply depressing. If you need a bit of shock therapy to convince you of just how extreme things had become, there is no better source.

But as I watched the film, I wondered who it was really going to hurt. The plain target of the story as it ties to Abramoff is of course the Republicans. Abramoff (with Karl Rove, Ralph Reed, Grover Norquist) was a College Republican revivalist. He came to power as that movement, born in the wake of Reagan, was launched into orbit with the ascendency of the Republicans in 1995. He consolidated and extended his power as the Republicans consolidated and extended theirs. He was the righthand lobbyist to the exterminator-turned-congressman Tom Delay. He brought Delay down, and had John McCain really allowed the investigation that he had started to work its course, he would have brought down many more in the Republican Party as well.

Yet when you add up the real harm that Abramoff did to America, it looks a bit puny, at least next to the harm just briefly mentioned at the end of Gibney's film -- the harm caused by the bending of laws that bent our financial sector to push the American economy over the cliff in 2008.

For no doubt Abramoff was scummy. No doubt, he bilked millions from Native American tribes. He protected sweatshops in Saipan. He bullied a Greek millionaire into selling a floating casino. These were all schemes designed to make Abramoff (and his friends) rich. Whatever idealism originally inspired Jack Abramoff to get into politics, this is not a film about an ideologue. If Abramoff had gotten into politics to end the government mealticket (aka, welfare), he was escorted out of politics (in a striped jumpsuit) after perfecting government-as-his-mealticket.

But the scumminess of Abramoff cost America peanuts compared to the not so scummy, in plain sight behavior that Gibney points to at the end of his film. For at the same time Abramoff was perfecting his technique for bilking the wealthy (at least at the level of an Indian tribe) but vulnerable, the Democrats were perfecting their show of love for Wall Street. The 1990s were the years when led by President Clinton, the Democrats succeeded in convincing the financial services sector that they could love deregulation as much as Republicans.

I'd bet none of that wooing was remotely as gross as Abramoff's. The effort of President Clinton to signal his affection for Wall Street was in the open. The appointment of Rubin and guidance of Summers were not hidden from anyone. The effort of Charles Schumer to lead Democrats to raise as much money as possible from Wall Street was not anything anyone was embarrassed by (or so it seemed). Indeed, the whole move to deregulate Wall Street (setting the stage for the disaster we've just witnessed) was given cover by the Republicans, as the ideology of the time confirmed what the Wall Street lobbyists were trying to push: Let the financial system innovate free from regulatory oversight. Trust us. Things will be really really great.

And they were. For a time. And then things got really really bad, though not for the very top on Wall Street. When the bubbles burst (bubbles inflated in part by an apparently grotesquely corrupt form of market rigging, or so This American Life (building on a report from ProPublica) believes), the government came to the rescue -- of the already very rich. As Simon Johnson and James Kwak recount in their fantastic book, 13 Bankers, because Wall Street had so effectively leveraged financial power into political power, it had set the table for the bailouts that Obama would serve. Bailouts which would enable them to make record earnings and pay record bonuses while the rest of America tried to clean up the record financial mess they helped to create. Even Richard Posner has criticized the bonuses for at least one of the key bailout beneficiaries, Goldman Sachs, calling them "egregious." The behavior of the very rich was very bad, for America and for the prospect of an unregulated financial utopia.

The Republicans are responsible for Abramoff. The Democrats, as much as the Republicans, are responsible for the financial mess that we're still suffering. And this is the Democrats' dirty money problem: For despite compelling documentaries like Gibney's, it is the blunder of financial mis-regulation that is going to get America's attention over the next three years, not Abramoff. As journalists and commentators come to understand more, the outrage they will inspire is only going to grow. America made a series of fundamental regulatory mistakes that led us into this disaster. And when the music stops, it will be the Democrats -- with Geithner/Summers/Obama at the center -- without a place to duck.

Now, of course, the Republicans are doing their best today to help the Democrats avoid this tarring. The obtuse effort to block re-regulation of Wall Street will backfire. If the GOP doesn't find a way to out-populist the Democrats, it will be the Democrats who have the chance to claim that they at least learned something from this mess, and are willing to do something about it.

But if the Democrats really want to get ahead of this populist storm, they need to demonstrate that they learned something real. They need to leverage this crisis into real and substantial reform. Not puny reforms likely simply to inspire more slap-downs by the Supreme Court, or yawns from the rest of America. But reform that no American could believe is just more game playing. Faith in Congress is at an historic low. Faith in government is at an historic low as well. If the Democrats care at all about the institution they now control, and institution whose public trust is crumbling about them, then they will finally take the first step in a 12 step program to reform Congress. They will admit Congress's addiction to campaign cash, and the harm it produces, to policy as well as public trust. And they will embrace fundamental reform.

There is such reform in a bill in Congress right now -- The Fair Elections Now Act, with almost 150 cosponsors in the House, and 17 in the Senate. That bill would produce campaigns with small dollar contributions only. The most anyone could give a candidate is $100. That $100 gets matched 4 to 1 by the government. Small dollars become big enough dollars -- big enough to wage an effective campaign, yet small enough to make it impossible for anyone to believe that money is buying results in Congress. Gibney's film -- released by the ever-activist Participant Media -- has a set of online tools to help push for the Fair Elections Now Act. An organization I helped found has tools as well at FixCongressFirst.org.

This bill is an opportunity for the Democrats. They need to seize it (as an amendment to the Van Hollen Citizens United Fix?). They need to recognize that it is (1) impossible to look at the insanity of mis-regulation in the financial services sector without believing that money bought these mistakes, and (2) impossible to ignore the Democrats in that mix of mis-regulation. Perhaps the money didn't corrupt directly. Perhaps not as Abramoff-scummily. And perhaps with a dominant ideology that made the mistakes seem sensible.

Regardless, America will recognize that it can't trust Congress behind the wheel of critical national policy, so long as it remains under the influence of large campaign cash. It will see that moderation is not a remedy for the addict. Only real and substantial reform is. And it will look for the party -- Republican, Democratic, Tea, Coffee or Cold Turkey Party -- that will provide it.

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