The resignation of Robert Litan from the Brookings Institution has exposed some of the fault lines within the Democratic Party. Litan resigned shortly after Senator Elizabeth Warren took issue with Litan testifying before Congress against a conflict of interest disclosure regulation for Wall Street, based on work funded by The Capital Group, a Wall Street firm with an interest in killing the disclosure regulation.
The Capital Group paid Litan and his co-author $85,000 to write the report, and the financial firm was, according to Litan, allowed to offer their own comments for consideration before the report was published.
When testifying before Congress, Litan tried to add weight to his and Wall Street’s cause by invoking the credibility of the Brookings Institution as an objective think tank, even though Brookings has a rule against non-resident scholars doing so. The violation of the rule and surrounding controversy led Litan to resign from Brookings. Litan said that Senator Warren’s letter had “created some discomfort” and he felt it would be wise for all involved if he moved on.
A group of former Clinton Administration economic advisers then attacked Senator Warren claiming that, by citing Litan’s paymaster and clear conflict of interest, Warren had been engaging in an “ad hominem attack.” The group openly worried that other economists who worked for Wall Street or various corporate interests might face the same critique that Litan faced.
The acrimony over the Litan resignation and Warren’s policies on tackling the influence of moneyed interests in policymaking highlights a key division within today’s Democratic Party. The corporate wing of the party, perhaps best exemplified by the Clintons, is in increasing tension with the populist wing, best exemplified by Senator Warren and Senator Bernie Sanders. That two such comprehensively contradictory factions could even coexist in one political party is a testament to the perceived futility of third parties in American politics.
While Senator Warren challenges Wall Street’s power in Congress and Senator Sanders decries a government controlled by plutocrats on the presidential campaign trail, former Secretary of State Hillary Clinton avoids making even modest critiques of the Wall Street establishment. As Bloomberg notes, Clinton continues to claim, incorrectly, that the 2008 financial crisis was brought on by shadow banking, not Too Big To Fail mega-banks like Citigroup, JPMorgan, or Goldman Sachs that are part of Clinton’s fundraising base.
Hillary Clinton is still considered by many in the establishment press to be the presumptive nominee, but it is unclear why the populist faction of the party would be interested in a Clinton candidacy on its own merits. The saving grace for Clinton might be that the Republican Party will offer a candidate so offensive to progressive cultural sensibilities that the populist faction will hold its nose and vote for her to deny the office to someone worse.