TPM Cafe: Opinion

The New Main Street Consensus


Since 1953 when two senior partners of a Wall Street law firm, the brothers John Foster and Allen Dulles began running American foreign (and often domestic) policy, an establishment view, through Democratic and Republican presidencies alike, has been the norm. As Stephen Kinzer, in his book, Brothers, has written about the Dulles brothers, “Their life’s work was turning American money and power into global money and power. They deeply believed, or made themselves believe, that what benefited them and their clients would benefit everyone.” They created a world in which the Wall Street elites at first set our foreign policy and eventually (under President Ronald Reagan) came to dominate domestic and tax policy—all to the benefit of themselves and their clients.

In 1969 the median salary for a male worker was $35,567 (in 2012 dollars). Today it is $33,904. So for 44 years, while wages for the top 10 percent have continued to climb, most Americans have been caught in a ”Great Stagnation,” bringing into question the whole purpose of the American capitalist economy. The notion that what benefited the establishment would benefit everyone, had been thoroughly discredited.

Seen through this lens, the savage partisanship of the current moment makes an odd kind of sense. What were the establishment priorities that moved inexorably forward in both Republican and Democratic administrations? The first was a robust and aggressive foreign policy. As Kinzer writes of the Dulles brothers, “Exceptionalism—the view that the United States has a right to impose its will because it knows more, sees farther, and lives on a higher moral plane than other nations—was to them not a platitude, but the organizing principle of daily life and global politics.” From Eisenhower to Obama, this principle has been the guiding light of our foreign policy, bringing with it annual defense expenditures that dwarf those of all the world’s major powers combined. The second principle of the establishment was, “what is good for Wall Street is good for America.” Despite Democrats efforts to paint the GOP as the party of Wall Street, one would only have to look at the efforts of Clinton’s Treasury secretaries Rubin and Summers to kill the Glass-Steagal Act and deregulate the big banks and the commodities markets, to see that the establishment rules no matter who is in power. Was it any surprise that Obama then appointed the architects of bank deregulation, Summers and Geithner, to clean up the mess their policies had caused?

So when we observe politicians as diverse as Sens. Elizabeth Warren (D-MA) and Rand Paul (R-KY) railing against the twin poles of establishment orthodoxy, can we really be surprised? Is there not a new consensus that the era of America as global policeman is over? Is there not a new Main Street consensus that the era of crony capitalism and corporate welfare is finished? Is there not a right/left consensus that the wholesale violations of the Fourth Amendment’s right to privacy must end?

I believe the answer to all of these questions is yes and that any potential Presidential candidate for 2016 must understand that a reform agenda must be at the heart of their campaign. And as for President Obama, if he wants to regain his tarnished legacy, he needs to read up on the last three years of Teddy Roosevelt’s Presidency in which a reform agenda: “Three C’s of the Square Deal” became his constant theme: conservation of natural resources, control of corporations, and consumer protection. The New Main Street Consensus is for reform and there is very little that Wall Street and K Street can do to change that reality.

Professor Jonathan Taplin is the Director of the Annenberg Innovation Lab at the University of Southern California.