The Democrats Deal for Dollars: Money and Destiny in 1992

Thomas Ferguson updated his analysis in this commentary in 1992. With the presidential campaign under way a curtain of silence descended upon the class issues so heatedly discussed a few months before, while a vast mass section of the business community, particularly the multinationals, lined up to help finance the Bush campaign. Here Ferguson discusses why Clinton was emerging as the candidate of choice.

THOMAS FERGUSON

The most obvious and important development on Democratic side of the 1992 presidential campaign is the continued rightward drift of the whole spectrum of debate within the party: In the just-concluded Clinton-Tsongas duel, for example, both candidates deliberately positioned themselves firmly to the right of Michael Dukakis. Also, as many have noticed, the Democratic candidates have addressed their campaign appeals almost exclusively to the middle class, as opposed to the poor, or even working people. Rarely, if ever, do they speak of cities.

One reason for the dramatic change in climate is, of course, the fact that Jesse Jackson was successfully pressured into staying on the sidelines. But this scarcely accounts for the shift in the mainstream itself, which never embraced Jackson's agenda but was quite happy to invoke "fairness" and urban America. Another glib explanation-the sheer fact of the '84 and '88 losses-surely explains little. Dukakis did not blow a seventeen-point lead because he talked about cities-for many weeks he had nothing to say at all. When he moved to the left at the end of the campaign he began recovering in the polls. Even more to the point, a sophisticated discussion of the problems of the poor does not demand the skills of a rocket scientist, even if it is obvious that intelligent candidates also need to speak directly to the middle class.

Here is where an analysis of party finances is truly illuminating. In 1984 and 1988, one of the most obtrusive features of the Democratic Party's often very thin financial base was in outpouring of support from urban real estate interests and developers. Note that this discussion refers to interests large enough to qualify for the Forbes 400 list of the richest Americans; smaller fry are of course scattered everywhere among the Federal Election Commission contributor lists. Centered mostly in the Northeast and Midwest, and a few other areas such as San Francisco and Atlanta, which were heavily dependent on federal spending for infrastructure, "community development" and mass transit, this constituency competed head-on with the military for scarce funds. Accordingly, it strongly supported center-left liberals who emphasized the "fairness" rhetoric and pressed for limits--one can scarcely say major cuts--in military spending. (In my earlier statistical studies, this phenomenon often showed up very dramatically Candidates who were strongly backed by real estate received disproportionately low rates of funds from aircraft producers, and vice versa.)

In 1992, however, the giant sequoia that supported this traditional core appeal of the party appears to have toppled. Although my 1988 study of early money showed the real estate presence plainly enough, this year Bush's rate of contributions from this sector is actually running ahead of the Democrats. Although a full analysis requires more data than are now available, it is not difficult to identify what has happened. The combination of the collapse of real estate values, the increasingly hopeless condition of many major cities, and the 1986 Tax Act (which eliminated several important real estate tax breaks), along with the President's recent proposals to reinstate broad tax deductions for real estate losses, has led most of this group to sell out, take their losses and reorient their business plans-in many cases to urban development projects in Europe, which certainly changes their calculations of the costs and benefits of the American military. This collapse of the real estate constituency within the Democratic Party explains why the truly sophisticated response to Nebraska Senator Bob Kerrey's celebrated retort to Jerry Brown ("Are you saying that I am bought and paid for?") might well be in the end, "No-and so much the worse for your campaign." Of all the candidates, Kerrey's pattern of contributions from the sample of top business figures I analyzed most resembles Mondale's or Dukakis's: knots of urban real estate magnates, investment bankers and financiers (including George Soros and, according to one newspaper account, Paul Volcker), a handful of oilmen, plus some Hollywood money. There just weren't enough of these types, however, to float a mid center-left campaign with a serious thrust on health care. As a consequence, Kerrey quickly began flailing. One day he was a protectionist hockey goalie; on another a free trader (who lets the puck go by?), and so forth. Almost inevitably, his campaign collapsed, leaving behind a large debt.

Senator Harkin's campaign appears to have been another that suffered from the collapse of the realtors' bloc. In the very earliest stages of the race, prominent developers touted his candidacy. Their support, however, never materialized (one initially vocal developer whose contributions I made a special effort to trace turned up as a Clinton contributor, raising the question of whether the true aim of the early talk about Harkin was to weaken Cuomo by bringing another perceived liberal into the race).

Harkin compounded his difficulty by making two grave mistakes. First, as some critics promptly noted, while the Iowa-based head of one of the largest insurance companies in the United Estates and other industry figures contributed to his campaign, Harkin dodged the health care issue that Senator Kerrey so bravely raised. Second, the candidate and his staff confused running a campaign with holding a seance. That is, in 1992, it is simply not enough to invoke the shade of Franklin D. Roosevelt (or more precisely, "traditional Democratic values"), or even to assure voters what a study of Harkin's career readily confirms-that the Iowa liberal is indeed "on the side of" average Americans. To reach an increasingly jaundiced electorate requires not indirect discourse, symbols or abstract talk about even more abstract "values" but Brown's or Tsongas's plain-spoken efforts to pound away at a handful of major issues.

Harkin, however, confined himself to an inside game increasingly dependent on the official union movement, which has largely sat on its hands during the recession and is now widely unpopular with many of its most active members. The PAC support that Tsongas initially complained about never amounted to much, with the result that Harkin had almost no money to transmit his all-too Aesopian message. (it cannot have helped that the first primary outside his home state occurred in one of the most strongly anti-union states in the country.) Around the time he withdrew, 75 percent of Democratic voters were telling pollsters that they didn't know enough about him to have an opinion.

Running out of money, by contrast, was one problem that Bill Clinton never had to face. A leader of the Democratic Leadership Council-the Southern-oriented group whose efforts to shift the party to the right have been enthusiastically supported by Northern businesses-the Arkansas Governor began the race with strong support from businesses in his own state, including Tyson Foods; Murphy Oil; Wal-Mart (where his wife sits on the board and whose owners, the Walton family, lost all heavy contributors to his campaign); giant Beverly Enterprises, a large private provider of health care; and the investment banking, oil and gas interests associated with the Stephens family.

It may be sheer coincidence that back in 1976 the last named was also close to Jimmy Carter as he began his run for the White House. But the Clinton campaign's striking resemblance to the earlier Carter effort-in which a moderately conservative free trader from the South with some well-disciplined center--left humanitarian impulses runs from the periphery of America supported by internationally oriented investment bankers and their allies on Wall Street, in Washington and in the press--is certainly not accidental.

In 1992, however, most of American business is far more, conservative than it was in 1976 (when, it should be recovered, the much more liberal Morris Udall could still attract important business supporters in addition to his labor backing). As a consequence, the Clinton candidacy is centered far more on investment bankers (and to some extent, communications companies and even retailers whose biggest enterprises now bulk larger in the economy than they did then) than was Carter's. Among prominent investment bankers contributing to the campaign are the Blackstone Group's Roger Altman and Peter Peterson (who has also given to Bush and whose views about the appropriate level of consumption for average Americans are well worth re-analyzing should Clinton win), and many partners at Goldman, Sachs (including Robert Rubin, perhaps the firm's leading figure, who once, only half in jest, compared F.D.R’s Glass-Steagall Act, which separated investment from commercial banking, to the Magna Carta); Greenwich Capital Markets; and other large houses.

Such interests differ only marginally from the internationalists at the core of the Bush coalition with respect to either foreign or domestic policy. Virtually all now work closely with Japanese firms to help invest the fabled trade surplus. Indeed, some, such as Blackstone and Goldman, have Japanese partners, while others, for example Greenwich Capital Markets, are actually subsidiaries of prominent Japanese enterprises. This practically guarantees what is in any case obvious from a close study of the campaign's policy pronouncements: that, for all its election-year posturing about "change:' a Clinton Administration would not depart radically from the Bush team's policies, particularly in regard to the critical questions of international trade and finance. At most, there would be more investment in "human capital" and some small pro- grams targeting investment in civilian technology. A Clinton Administration is also likely to strike a different tone on race relations even as it declines to spend money on cities. It would also nominate different kinds of judges to all levels of the federal bench, and take a slightly softer line than the Bush Ad- ministration on the Israeli settlements issue.

What a Clinton Administration almost certainly will not do, however, is put forward a sweeping health insurance reform. If anything is clear from the F.E.C. roster of contributors, it is that the Arkansas Governor's lack of clarity about his plans for medical insurance is strategic. The lists are full of donations from various parts of the medical-industrial complex, whose interest in blocking major reform is all too apparent. Trial lawyers are also abundant, suggesting that a Clinton Administration will not soon be tampering with the fabulously costly laws on liability or otherwise attempting to regulate expensive lawsuits (a cause the Bush Administration is now taking up, both to strike a populist pose and to satisfy its insurance constituency). . .