11/6/2014
Elizabeth Warren's shrewd anti-capitalism has progressives on the war path.
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Equally dubious, the authors classified a bankruptcy as having a “major medical cause” if the individual had accumulated more than $1,000 in out-of-pocket medical expenses (uncovered by insurance) over the course of two years prior to filing—regardless of income, and even if the debtor did not cite illness or injury among the reasons for bankruptcy.
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Elizabeth Warren's shrewd anti-capitalism has progressives on the war path.
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If Elizabeth Warren ends up being the Democratic Party’s presidential nominee in 2016, don’t be surprised if she runs as a centrist, or even as a cultural conservative. The senator from Massachusetts and Harvard Law School professor known as the scourge of the banks and the inventor of the federal Consumer Financial Protection Bureau will talk about her lesser-known roles as a Sunday school teacher, devoted grandmother, and loving dog-owner. She’ll talk about how she enjoys drinking beer and eating fried clams, McDonald’s, Burger King, and Mounds chocolate bars. She’ll talk about her Air Force pilot Vietnam veteran brother and about baking “four trays of peach cobbler” and cleaning up the dishes afterward while wearing her “long white apron.”
She’ll discuss how as a senator she reached across party lines, joining Republicans Ted Cruz and Mike Lee to co-sponsor a resolution by another Republican, Rand Paul, to repeal the Authorization for Use of Military Force Against Iraq. She’ll tout how she joined yet another Republican, Marco Rubio, to sponsor a bill to help prevent children from being trafficked as sex slaves. She’ll mention how she worked with the GOP’s Senate sage Mitch McConnell to try to overhaul the federal regulations governing sunscreen.
Her allies might even whisper, as they did in her Senate campaign against Scott Brown in 2012, that she was a registered Republican until 1996. They might mention that as a professor at the University of Pennsylvania, she opposed granting tenure to a feminist legal philosopher who later sued the law school for gender discrimination.
All of this will be accurate in some technical sense, but on another level it will be deeply deceptive—like, well, an awful lot of things about Elizabeth Warren.
Take something that seems basic, like what cars her family drove when she was younger. In her new memoir, A Fighting Chance, Warren tells the heart-tugging tale of two autos. The family station wagon—“a glowing bronze color, with leatherette seats and an automatic transmission”—was repossessed after her father, the main breadwinner in the family, had a heart attack and couldn’t make the payments on it. According to the book, that left the Warrens, who lived in Oklahoma City, with a Studebaker so old and rusty that her dad used to drop Elizabeth off a block away from the school to avoid embarrassing her. Reporting during the Senate campaign on Warren’s background, however, the Boston Globe turned up a third car: a high-school friend remembered driving “in Warren’s white MG to the Charcoal Oven drive-in for lunch in their senior year.” There’s no mention of the white MG in Warren’s book, perhaps because the idea of a high school senior tooling around in a sports car doesn’t quite mesh with her carefully constructed pathos.
Or take the story of Warren’s divorce. As A Fighting Chance tells it, her first husband, Jim Warren, “moved out” and eventually “met a very nice woman and remarried.” In the next section of the book, Warren introduces the law professor who would become her second husband, Bruce Mann: “I fell in love with Bruce because he had great legs. Really….I was completely crazy about him.” The real timeline is less tidy. As the Globe put it in an article about Warren’s family that was published during the Senate campaign: “She did not file for divorce until the fall. By then, she had already met Mann.”
Then there’s Warren’s version of her activities in 2008 and 2009, when she was chairman of a Congressional Oversight Panel created to keep an eye on the Troubled Asset Relief Program that Congress created after the economic crash. According to her memoir, this was a frantic, sleepless period devoted to government service: “We needed to get organized, and we needed to do it fast…right now, we didn’t have a second to lose…the COP staff worked late.” She doesn’t mention directly that, in addition to TARPing away at all hours and teaching at Harvard Law School, she was also spending time on lucrative corporate consulting work. She was reportedly paid $212,000 by the Travelers insurance company between 2008 and 2010 for work on asbestos litigation. While head of the Congressional Oversight Panel, she was also reportedly paid $90,000 to be an expert witness for retailers suing credit card companies and banks for price-fixing, and $20,000 by the law firm Wilmer Cutler Pickering Hale and Dorr (representative clients: Citigroup, Credit Suisse, Goldman Sachs, JPMorgan Chase) to have lunches with its lawyers.
Warren’s supposed status as an American Indian—her mother’s mother was “a little bit Delaware, and her father was more Cherokee,” she said, though “it might have been the other way around”—is another example of Warren reshaping the narrative in her favor. Her ancestors reported themselves on the Census as white, and she is not an enrolled member of any Indian tribe. When it came time for Professor Warren to apply for law faculty jobs at a time when schools were under pressure to add minorities, though, she conveniently checked the box as Native American.
The new book dwells on Warren’s hardscrabble upbringing—“the daughter of a telephone operator and a maintenance man,” she went to college on “a full scholarship and a federal student loan.” Less is said about her current circumstances, which by all accounts are pretty swell: a $740,000 apartment in Washington, D.C., and a 3,728-square foot, three-and-a-half bathroom house in Cambridge, Massachusetts, with an assessed value of $1.8 million that she and her husband appear to own mortgage-free. Her total assets, according to Senate personal financial disclosure records, are somewhere between $3.8 and $10.2 million.
In 2010 she and her fine-legged husband, who is also at Harvard, reported joint income of $954,721, according to tax information released by her campaign. Automobile-wise, she’s traded up from rusty Studebakers and repossessed station wagons to a BMW 528i, though the Boston Herald reports that she ditched hers for an American-made hybrid SUV (one thirty-second of the parts are from a Jeep Cherokee, the joke goes) just in time for the Senate campaign.
If shading a campaign biography to fit the candidate’s political purposes were a crime, it would be a misdemeanor, one of which few politicians would be entirely innocent. Such selectivity when it comes to the use of data in academic research, however, is a higher order of no-no, one that has earned Warren some harsh critics over the years. Todd Zywicki, a professor of law at George Mason University, wrote in the Wall Street Journal that Warren has “a track record of using questionable research to advance policy ends.”
Take Warren’s research attributing a large share of personal bankruptcies—46 percent in a study of 2001 data—to illness and medical bills. As Zywicki wrote:
First, the study provided an implausibly broad definition of “medical bankruptcy”—including any filer who reported uncontrolled gambling, drug or alcohol addiction, or the birth or adoption of a child.
In 2001, average per capita out-of-pocket medical expenses were $683. During the two-year period Ms. Warren and her co-authors studied, in other words, Americans spent an average of $1,366 on uninsured medical expenses, or 30% more than their threshold definition of a “major medical cause.” There was no larger context for their threshold figure: A debtor with $1,001 in uncovered medical expenses and $50,000 on a Saks card would constitute a “medical bankruptcy” in their study.
In a later paper—one that Megan McArdle described in the Atlanticas “not just wrong, but actively, aggressively wrong,”—Warren and her colleagues concluded that the problem had grown:
69 percent of 2007 of bankruptcies met their previous definition of being “medically caused.” But they only cited their findings in percentages, and noted nowhere that the absolute number of bankruptcies dramatically declined after Congress changed the filing rules in 2005. As McArdle notes, 1.45 million households went bankrupt in 2001, and only about 727,000 did in 2007:
This is elementary social science. A huge change in the composition of your sample needs to be noted. It certainly should not be artfully disguised. If the 2005 bankruptcy form made it more difficult to file bankruptcy, the people who still file bankruptcy will largely be those who are forced to it by events totally beyond their control.…Elementary googling reveals that the two doctors who co-authored this study are prominent spokespeople for Physicians for a National Health Program, and thus have an obvious agenda, one that Elizabeth Warren has not been shy about sharing.
Nor have substantive concerns about Warren’s work been expressed only by her ideological foes. Reviewing Senator Warren’s signature first-year legislative proposal, a bill that would have lowered interest rates on federal student loans to the rock-bottom rate that the Federal Reserve charges on money it loans to banks, the center-left, Washington establishment Brookings Institution described it as an “embarrassingly bad proposal.” Two Brookings fellows wrote that:
Sen. Warren’s proposal should be quickly dismissed as a cheap political gimmick. It proposes only a one-year change to the rate on one kind of federal student loan, confuses market interest rates on long-term loans (such as the 10-year Treasury rate) with the Federal Reserve’s Discount Window (used to make short-term loans to banks), and does not reflect the administrative costs and default risk that increase the costs of the federal student loan program.
Writing in the New Yorker, Warren’s Harvard colleague Jill Lepore concluded that “the solutions that Warren has proposed often fail to convince.” One Warren idea, “a universal public-school voucher system in which parents could send their kids to any public school,” she called “reckless.”
Even Timothy Geithner, in his new memoir Stress Test, writes that Warren’s oversight hearings “often felt more like made-for-YouTube inquisitions than serious inquiries,” and that “she was better at impugning our choices—as well as our integrity and our competence—than identifying any feasible alternatives.”
As a rookie senator, Warren managed to get the Senate to pass resolutions congratulating the Red Sox on their World Series win and condemning the Boston Marathon bombing. The New Republiccredited her for blocking—behind the scenes—the potential nomination of Lawrence Summers to chair of the Federal Reserve.
But when it comes to crafting legislative compromises that become law, or building coalitions for policy ideas, results for Warren have been less than forthcoming.
Her most significant legislative accomplishment may have predated her election to the Senate. That was pushing for lawmakers to include in the Dodd-Frank financial overhaul bill a Consumer Financial Protection Bureau funded by the Federal Reserve. And even that has been off to a rocky start. Auto dealers managed to get car loans carved out from the CFPB’s oversight. The Bureau has been in the news for paying $22.3 million to lease temporary office space for two years while its future headquarters undergoes a $145 million renovation. President Obama chose not to fight a battle for Warren’s confirmation to head the agency; he didn’t even try a recess appointment, instead tapping her to get the agency up and running from the platform of a staff job at the Treasury Department.
A senior attorney at the agency recently testified to Congress that the bureau has a “pervasive culture of retaliation and intimidation that silences employees and chills the workforce from exposing wrongdoing.” The lawyer, Angela Martin, says she was sidelined after complaining of sex discrimination, a charge that her supervisor disputes. An investigator brought in to look into the complaints found “exclusion, retaliation, discrimination, nepotism, demoralization, devaluation and other offensive working conditions.”
So if Elizabeth Warren is not just a phony, but an ineffectual phony, why bother to take her seriously at all?
For one thing, she’s an ineffectual phony with crossover appeal. In the 2012 election, she blew away Scott Brown, 54 percent to 46 percent, in a state where the roughly 2.3 million independent voters outnumber the roughly 1.5 million registered Democrats. An exit poll showed Warren won 41 percent of the independents.
Further, that crossover appeal is based on a message—taking on the big banks, demonizing Wall Street—that has the potential to resonate not only with the Occupy progressive crowd, but with the anti-bailout, Tea Party rural right. The Republicans created this trap for themselves when George W. Bush, Henry Paulson, and Ben Bernanke decided to mitigate the effects of the financial crisis by injecting capital into Goldman Sachs, Citigroup, and other big-name financial institutions. When Warren waxes nostalgic about anti-usury laws that cap interest rates on loans—as they did “ever since the days of the Founding Fathers,” she writes in A Fighting Chance—it’s not hard to see where she’s headed.
Some of this backlash against cronyism is legitimate, and Republicans like Rand Paul will try to tap into some of the same feelings. Some of it, though, is dangerous and exploits age-old grievances against cardboard cut-out versions of shady New York bankers. Warren’s rhetoric depicts the entire financial industry as a cesspool of Shylockian fraudsters, conniving to trap innocent old ladies into tricky adjustable rate mortgages and saddle struggling families with penalty fees and credit card debt. She forgets to mention that banks and other financial institutions employ a lot of people, including in her home state, and that the credit they provide makes possible a lot of things that families and businesses would be worse off without.
But Warren has already proved that her ideas can travel far and wide. During her Senate campaign, she spoke at a house party in Andover, Massachusetts. In her now-famous words:
There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear: You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for.
Less than a year later, President Obama echoed Warren’s theme in his “you didn’t build that” speech, which offended millions of hardworking Americans without hurting him in the polls, much less costing him the election.
Will Professor Warren, Senator Warren, try to become President Warren? At first blush, it seems like a long shot for some Harvard Law School-credentialed professor type with little management or private-sector experience (other than the aforementioned lucrative legal consulting) and no foreign policy chops to beat out Hillary Clinton in a Democratic primary. But crazier things have happened.
That’s what they said about Barack Obama, and look where he ended up. In a contested primary, Mrs. Clinton would be an easy target for Warren’s populist anti-Wall Street demagoguery. One can imagine her making sport of Clinton’s $200,000-a-pop speeches for Goldman Sachs. And if for some reason Hillary doesn’t run, those who had been ardently invested in the “first woman president” dream seem somehow more likely to turn to Professor Warren as their backup candidate than to someone else with more executive experience and national standing, like, say, Sarah Palin.
Of course, if Professor Warren were to run and win, “woman president” wouldn’t be her only first. Comedians have suggested that the Republicans nominate the governor of Louisiana, Bobby Jindal, and make it an Indian American versus an American Indian. It’s about time we had a Native American president, don’t you think?
The way she feels about Wall Street, the bankers will have to be careful that she doesn’t try to give Manhattan Island back to the Lenapes.
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