No One Wears Blue Jeans On Wall Street

Yesterday, George Will was the butt of many jokes for his grotesquely stuffy and elitist column in the Washington Post denouncing people who wear denim. No one ever accused him, or his ilk, of having something approaching the common touch (the way a conservative ex-Democrat like Reagan did). His distaste for populist pants mirrors Republican Party insiders' distaste for populist politics. Franz Joseph Hermann Michael Maria von Papen zu Köningen came from the same kind of "respectable" right that George Will feels so comfortable sucking up to, "the natural leaders." In the 1930s when Adolf Hitler was the head of Germany's teabaggers, Chancellor von Papen, who headed a "cabinet of barons" (also derided as a "cabinet of monocles") made a deal with Hitler that led to a totalitarian takeover of his country. The ineffectual, scheming Von Papen became Vice Chancellor as a quid pro quo for talking the ailing President Paul von Hindenburg into naming Hitler-- whose party had just lost seats in the Rechstag-- Chancellor. The monarchists and industrialists saw Hitler as a their useful tool with his ability to stir up the unwashed masses on the side of right-wing ideology. They were always sure they could control him. In Hitler's first cabinet the Nazis had only 3 seats, while the conservatives had 8. When warned that he had placed Germany in danger by putting Hitler in as head of the government, von Papen was smug: "You are mistaken. We've hired him." Hitler rolled right over him and the "respectable right," murdering most of von Papen's closest associates at the first attempt von Papen made to interfere. The right-wing party in America, the Republicans, have a similar, inevitable, internal battle raging. Recall Harry Reid's profuse praise for Chamber of Commerce head Tom Donohue and the Business Roundtable after the capitulation Friday, two respectable right groupings dependent on government largesse.

Business is so dependent on government that it has been reassuring Democrats that it wants to avert a shutdown and fiercely lobbying Republicans to strike a compromise.

Chamber of Commerce President Tom Donahue twisted the arms of GOP lawmakers this week and then met with Senate Majority Leader Harry Reid. Dow Jones Newswires quoted Reid saying that Donahue "told more than 100 Republicans yesterday at an event that they were making a huge mistake shutting down the government." Business Roundtable head John Engler personally lectured Boehner on keeping government running for the sake of government contractors.

It's yet another battle in the bailout-sparked war for the soul of the GOP. Tea Party groups are pulling Republicans toward austerity, while the business lobby is either ambivalent or opposed to spending cuts.

The chamber's role as a counterpoint to the Tea Party has always presented a potential rhetorical problem for Democrats. The White House tried to make the 2010 elections about Republican coziness to the chamber and other corporate lobbyists, while today business interests are aligned with the White House.

The contradiction stems from the divergent agendas of the Tea Partiers and the U.S. Chamber of Commerce. The chamber supported Troubled Asset Relief Program, stimulus, cash for clunkers, green subsidies, and Obama's proposed new infrastructure spending-- all of which The Tea Party opposed.

Government contractors have been vocal in their fear of a shutdown. An executive at Army contractor Belzon in Huntsville, Ala., told a local reporter, "We will start losing money on day one" of a shutdown. While federal workers are compensated for wages lost during a shutdown, contractors' employees are not. Back in February, the Professional Services Council gathered hundreds of government contractors to come up with a strategy to deal with a shutdown.

These worries resonate with Boehner, who said last week, "Let's all be honest, if you shut the government down, it'll end up costing more than you save, because you interrupt contracts." Also, some pending contracts have been delayed amid recent uncertainty about shutdowns.

But a shutdown could hurt even those businesses for whom government isn't the customer. Commerce Department trade missions, Energy Department loan guarantee programs, and all sorts of other business subsidies could be foiled if appropriations expire this weekend.

Republicans also know they are likely to lose the public relations battle. Even though this debate is about passing appropriations bills that Democrats simply shirked when they controlled the whole process before January, the media and the public are likely to blame a shutdown on the GOP. The PR fears combine with business pressure to weaken the hand of the spending cutters.

This demonstrates two points that should trouble anyone who shares the Republicans' professed belief in limited government. First, there is no powerful Washington constituency for serious spending cuts. Tax cuts and deregulation have their powerful champions, but federal frugality offers no concentrated benefits. This is part of why the GOP managed to cut taxes last decade while boosting spending. This is also why the Tea Party, wielding the threat to wage primary challenges against profligate Republicans, is so extraordinary and so important.

Second, the business-government coziness highlights a weakness in the U.S. economy. Businesses that serve government or rely on subsidies are not serving consumer demand, they are serving political demand. This makes the country poorer, as profits are less tied to giving people what they want and more tied to the ability to please politicians.

The story of freshman Rep. Michael Grimm (R) from Staten Island, N.Y., shows how the business lobby blunts the insurgent edge of GOP lawmakers. Boosted by Tea Partiers in his primary campaign last year, Grimm has moderated considerably, thanks in part to his budding relationship with Wall Street-- a crucial industry for his district. Bloomberg News wrote this week, "Grimm is emerging as an advocate for financial services firms." In March, he chastised lawmakers looking for $61 billion in spending cuts as the "extreme wing of the Republican Party." Grimm has thus adopted the talking points of another Wall Street-friendly lawmaker, Sen. Chuck Schumer, D-N.Y.

Republicans have two powerful pulls on them: the business lobby and the Tea Party. One has money. The other has votes.

Boehner might have to choose between the two.

I live in L.A. I had dinner with a progressive senator a couple weeks ago in Mario Batali's over-the-top Osteria Mozza. We were both casually dressed-- although, I recall, only I was in blue jeans-- and he remarked about how Back East the suit and tie uniform is de rigueur in conveying authority. I pointed out how different it is in California, where there in the most expensive restaurant in Los Angeles, everyone sitting down was dressed casually and all of the people serving them were dressed like senators and congressmen.