The squeeze is on — for the elderly, not for Wall Street. Calling for a joint House-Senate budget resolution to implement tax hikes and spending cuts, Senator Chuck Schumer floated a trial balloon in The Hill last Wednesday detailing Democratic strategy in ongoing budget negotiations designed to avoid the massive funding cuts (sequestration) scheduled for March first. Although he later clarified that he didn’t support enacting cuts to Social Security or Medicare in this particular resolution, he left open their inclusion and didn’t rule out voting for them as part of a compromise.
Schumer, the New Yorker who sits on the powerful Finance, Banking, and Judiciary Committees, obtains the lion’s share of his campaign war chest from investment firms and lawyers, raking in over 15 million dollars from them since 1989. His four top donors are the financial leviathans Goldman Sachs, Citigroup, Morgan Stanley, and JPMorgan Chase. Swiss banks Credit Suisse and UBS AG ranked sixth and seventh, while failed investment banks Bear Sterns and Lehman Brothers came in eighth and ninth. Merrill Lynch, consumed during the 2008 financial crisis by Bank of America, took the number ten spot. Accounting firms Ernst & Young and Deloitte were Schumer’s tenth and eleventh largest donors; insurance giants MetLife and New York Life were 18th and 19th. Investment firm Cantor Fitzgerald was 20th.
As a member of the Senate Banking Committee, Schumer gets more campaign funds from financial firms than any other industry. As a member of the Judiciary Committee, his second largest source of money is from law firms. Corporate lawyers Paul, Weiss, Rifkind, Wharton & Garrison (his 5th largest donor), investment lawyers Schulte, Roth & Zabel (13th), mergers and acquisitions stars Sullivan & Cromwell (15th), and litigators Kasowitz, Benson, Torres & Friedman (16th) combined gave Schumer over $800,000. Other major donors include media conglomerate Time Warner (14th) and real estate firm Newmark Knight Frank (17th).
Schumer fervently supported repeal of the Glass-Steagall Act the Depression-Era law which regulated financial firms and whose evisceration led to the 2008 financial meltdown. When the crisis hit, the Senator fought hard to protect his Wall Street donors. According to a New York Times article published in December of 2008:
Other lawmakers took the lead on efforts like deregulating the complicated financial instruments called derivatives, which are widely seen as catalysts to the crisis.
But Mr. Schumer, a member of the Banking and Finance Committees, repeatedly took other steps to protect industry players from government oversight and tougher rules, a review of his record shows. Over the years, he has also helped save financial institutions billions of dollars in higher taxes or fees.
He succeeded in limiting efforts to regulate credit-rating agencies, for example, sponsored legislation that cut fees paid by Wall Street firms to finance government oversight, pushed to allow banks to have lower capital reserves and called for the revision of regulations to make corporations’ balance sheets more transparent.
“Since the financial meltdown, people have been asking, ‘Where was Congress? Why didn’t they see this coming? Why didn’t they provide better oversight?’ ” said Barbara Roper, director of investor protection for the Consumer Federation of America. “And the answer for some, including Senator Schumer, is that they were actually too busy pursuing a deregulatory agenda. Their focus was on how we have to lighten up regulation on Wall Street.”
Now Schumer will be in the vanguard of budget negotiations, which the White House seeks to have include “entitlement reform”, a euphemism for cuts to Social Security, Medicare and Medicaid. Given his history and his donor network, we can look for more gutting of New Deal legislation under Schumer’s leadership.