Wall Street Bails on Democrats: Midterm Candidates Claim It's a Plus

A front-page story in the July 6 issue of The Washington Post revealed that campaign contributions to Democrats have dropped 65 percent over the past two years, led by a defection of big donors on Wall Street. Newsweek's Fareed Zakaria suggested Wall Street is growing restless under the rule of a president they suspect is "anti-business," and that it's showing in the Democrats' fundraising numbers.

At least half of the drop can be attributed to New York, where most of the nation's largest financial firms are based. In the 2008 election cycle, 28 percent of the Democratic campaign committee's individual contributions came from the New York area, which includes New Jersey and Long Island. Manhattan alone contributed 20 percent. In this election cycle, only 10 percent of the Democrats' cash has come from the New York area.

Some Democrats think the economic climate has negatively affected wealthy donors, while others say dissatisfaction with the Obama agenda has dampened the enthusiasm of rich liberals who typically give generously to Democrats. "There's something fundamental going on, which is a complete disaffection with the committees," one New York donor in the finance industry told the Post. "Progressives have been throwing up their arms," the fundraiser said, explaining progressive donors' belief that the campaign committees favor conservative candidates.

Still others believe that President Barack Obama has signaled that he is uninterested in catering to the rich. "'How do I take care of these people?' is just not the way he thinks," a well-known Washington Democrat told Politico. "He doesn't care about them, and it trickles down to the rest of the system." Obama has headlined only one event in New York this year, for the Democratic Congressional Campaign Committee, and has steered clear of the Hamptons, where the Clintons were famous for turning their social connections into Democratic cash.

The motives behind the cash slowdown are clearer for Wall Street firms. Large business are especially worried about the Obama administration's financial reform law, which passed last week without Republican support. Between health care reform, new financial regulations, and the possibility of cap-and-trade legislation, businesses say they have lawyers working night and day to keep up with the new expansions of federal authority. Most Wall Street chief executives supported Obama, but are beginning to feel the Democrats are betraying them by calling for so much new regulation.

"Almost every agency we deal with has announced some expansion of its authority, which naturally makes me concerned about what's in store for us for the future," one CEO told Zakaria.

Business lobbyists say the legislative issues that have come up over the past year are shaping their strategy for the midterm elections.

"We've seen significant votes lawmakers have taken that directly affect the business community, and we're certainly going to hold lawmakers accountable for those, whether it's health care, cap-and-trade, or financial reform," said J.P. Fielder, a spokesman for the U.S. Chamber of Commerce. "We're going to spend a lot of time and money educating voters on where their lawmakers stood on those votes. They were major issues, and it makes [the 2010 midterms] a significant election."

But despite the talk of worry over the sudden chill from Wall Street, Democratic party strategists say the numbers in key races suggest they are still in a strong position for the midterm elections. As of the end of the last quarter, the Democratic Senatorial Campaign Committee had out-raised its Republican equivalent by nearly $3 million and beaten its own numbers for the same period in the 2006 election cycle, when the Democrats were believed to be on the verge of taking over both the House and Senate.

In races Republicans are targeting in 2010, Democrats have a financial edge, even where they trail in the polls. In Nevada, Sen. Harry Reid has $9,134,241 on hand to GOP challenger Sharron Angle's $132,016. In California, Sen. Barbara Boxer has $9,676,293, compared with the $620,460 that Carly Fiornia, her Republican opponent, has in the bank. In Arkansas, Sen. Blanche Lincoln has about four times as much cash on hand as John Boozman, her GOP opponent.

Some liberal groups see the rift between Democrats and big finance as a boon to the party's narrative, helping them portray Republicans as the party of Wall Street. "In terms of the conversation with voters in this election, there is no question that contributions from Wall Street are an issue, and for Democratic candidates to be able to run without those contributions is a plus," Steve Rosenthal, the president of the Organizing Group, a D.C. consulting firm, told the Huffington Post.

Deirdre Murphy, national press secretary for the DSCC, said voters will notice the contrast between the parties' interactions with Wall Street. "Republicans didn't police Wall Street and now they're cashing in," Murphy told Politics Daily. "Democrats firmly believe we must prevent another financial collapse, and come November, voters will choose between a Republican Party that brazenly shills for the banks, or Democrats who fought hard to stand up for taxpayers and get the economy moving again."