The Tea Party movement burst onto the political scene three years ago. The spark that got it started was CNBC correspondent Rick Santelli’s Feb. 19, 2009 on-air diatribe against the Obama administration’s program to provide aid to distressed mortgage borrowers.
“We’re thinking of having a Chicago Tea Party,” Santelli shouted from the floor of the Chicago Mercantile Exchange, winning applause from traders. By the end of that month, Tea Party protests were occurring in cities across the United States.
Considering that it was ignited by a trading-floor scene broadcast on a financial TV channel, the Tea Party has not been characterized by a particular affinity for the financial sector. On the contrary, outrage over federal bailouts of financial institutions has been a Tea Party theme, in keeping with the movement’s broader hostility to Big Government spending and activism.
Tea Partiers also have shown receptiveness to Ron Paul’s anti-Federal Reserve campaign, in which the Texas congressman and presidential candidate has denounced the central bank’s industry “cronies” and an “all-powerful, behemoth banking cartel.”
Such wariness of Wall Street jibes well with the movement’s populist, anti-establishment tone. The cultural disconnect between the Tea Party and Big Finance has overshadowed those areas where the two worlds overlap, such as in shared aversions to heavy regulation and taxes. While opposing the Dodd-Frank legislation, for instance, Tea Partiers tended to emphasize its burdens on community banks, not big institutions.
The Tea Party has been a powerful force in Republican politics over the last three years. The decentralized movement played a major role in energizing a GOP takeover of the House of Representatives in the 2010 elections. However, the Tea Party’s predilection for fervently outspoken candidates over compromising career politicians also produced some Republican nominees, such as Christine O’Donnell in Delaware and Sharron Angle in Nevada, whose defeats contributed to the GOP’s failure to retake the Senate.
The current Republican nomination race has offered evidence that the Tea Party’s influence is fading. Michelle Bachmann, Herman Cain and Rick Perry, all seen at one time or another as favorites of the movement, did not endure long in the competition. Sarah Palin, who might have been a formidable Tea Party unifier and champion, never put that proposition to the test.
Mitt Romney emerged as a clear frontrunner with his Florida primary win. Among the GOP hopefuls whose candidacies endured into February, Romney may be the least synced with Tea Party rhetoric and priorities. Unlike Ron Paul, Romney does not propose sweeping federal budget cuts and the embrace of a narrow Constitutional order. Unlike Newt Gingrich, Romney does not seek to rally a populist disdain for the GOP “establishment.” Rick Santorum, for his part, offers an emphasis on social issues whereas many Tea Partiers favor a fiscal focus.
Romney’s wealth and connections to the financial sector, including years spent at private-equity firm Bain Capital and portfolios invested with Goldman Sachs, have been tempting targets for his Republican rivals. Santorum has made a point of distinguishing between “high finance” and “capitalism that works for the working men and women of this country.”
Gingrich has employed rhetoric about “people power,” represented by his campaign, going up against the “money power” embodied by Romney. Going into the Florida primary, the former House speaker asserted that a win for his campaign would “send a signal to George Soros, Goldman Sachs, to the entire New York and Washington establishment: Money can’t beat people power.”
Undoubtedly, Gingrich intended such rhetoric to appeal to Tea Party distrust of Wall Street. However, the approach disquieted some conservative observers. Ira Stoll, editor of the free-market website FutureOfCapitalism.com, complained in late January: “If voters are looking for a president to demonize Wall Street or major banks, they’ve got a perfectly fine incumbent in Barack Obama.”
Since the financial crisis peaked, Republican and Democratic politicians alike have shown a reluctance to be seen as having close relations with the financial industry. President Obama famously declared that he “did not run for office to be helping out a bunch of fat cat bankers on Wall Street,” in a late 2009 interview.
Such rhetoric has meshed with policy disagreements in dampening Wall Street enthusiasm for Obama, which had been formidable in the last presidential race. During the 2008 campaign, Obama raised nearly $16 million from the securities and investment industry, compared to a little over $9 million for John McCain, according to the Center for Responsive Politics, a watchdog group.
The group’s statistics for the current race show that, through end-2011, Obama received contributions of a little more than $2 million from the securities and investment industry — while Romney received nearly $6 million. Romney’s GOP rivals garnered far smaller industry contributions, in six figures or lower.
The president, it should be noted, has formidable sources of campaign funding even with diminished backing from Wall Street. Obama received overall contributions of over $125 million as of end-2011. Romney’s total during that period was $56 million. As Romney seeks to narrow the broader contribution gap against the incumbent, cash from the financial sector will be a crucial factor.
With Romney as the probable nominee, and Tea Party populism evidently on the wane, the Republican Party appears to be moving toward closer relations with Wall Street.
For the GOP, there is the obvious attraction of raising cash from affluent financial executives. Yet there is also a more subtle draw. For a few decades until the financial crisis, as more Americans participated in the stock market, what came to be known as the “investor class” became a prized target of political strategists. Republicans and Democrats alike sought to tailor policies and rhetoric to win votes and contributions from this widening demographic.
The financial travails of the past few years have muted such political strategizing. But pent-up demand for profitable investments could translate into enthusiasm for a candidate who makes a case that his policies will help buoy markets. It is a theme on which Romney can be expected to put some emphasis.
The sunken popularity of the financial sector, even a few years after the crisis peaked, remains an important political consideration, however. Obama can be expected to drive hard at the theme that Romney is a tool of Wall Street. The rhetoric that Gingrich and Santorum directed against Romney on financial matters may seem tame in comparison with what Democrats unleash this November.
Of course, the risks and attractions of partisan politics extend also to the financial industry people who take one side or the other. Notwithstanding public disgruntlement that Wall Street has politicians in its pocket, there is little assurance that elected politicians will do what their supporters hope they will do.
Plus, there is always the possibility that the candidate one has publicly backed will be defeated. If Romney ends up losing in November, expect a backlash within the GOP against everything he represented, including ties to Wall Street.
Kenneth Silber is senior editor of Research magazine.