(Bloomberg View) — Thursday night's Democratic debate in New Hampshire was, all commentators agreed, unusually substantive. Bernie Sanders has clearly gotten the idea that he might actually win this thing, and decided it was time to actually attack Hillary Clinton, rather than gamely smiling and saying she was a nice lady, but what about Glass-Steagall?
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Clinton fought back, politely deriding Sanders as warm-hearted but naïve, a rube whose impractical plans would never work. The result was certainly lively television — at least, what passes for lively among people who really, really care about the proper treatment of key employee retention plans under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
There's a funny thing, though, about substantive debates: They are in some ways less informing than the fluffy sort Washington wonks hate. After all, a group of people sticking to vague generalities about American greatness, opportunity, and so forth can't actually be all that wrong. Wrongness emerges only when people start talking actual policy and making claims about the real world.
Take Clinton's stance on Wall Street, for example. In previous debates, we got bogged down in the need for a new Glass-Steagall. Since the old Glass-Steagall hadn't actually gone away, and no specific aspects of the theoretical new one were described, this had the ethereal, almost theological flavor of monks discussing how many angels could dance on the head of a pin. To put it in math-esque terms: The possible set of policies included in the phrase "new Glass-Steagall" was so large as to include nearly all possible outcomes, good and bad.
Last night, on the other hand, Clinton decided to stop mucking about with vague promises to bring Wall Street to heel. Instead, she claimed that she was a financial regulator of rare foresight and rarer steely will, hated and feared by the denizens of New York's financial district. Presumably we are supposed to see that $675,000 she was paid by Goldman Sachs to make three speeches less as a warm gesture between close friends, than as the bags of gold left outside the city gates for the Visigoth king who is threatening to sack the place.
"But what I want people to know," said Clinton, "is I went to Wall Street before the crash. I was the one saying you're going to wreck the economy because of these shenanigans with mortgages. I called to end the carried interest loophole that hedge fund managers enjoy. I proposed changes in CEO compensation."
Finally, specifics! And yet — this was a somewhat surprising claim. Those of us who were writing about financial regulation in 2007 do not recall Hillary Clinton as a fiery crusader against the financial industry. We remember her as being — like all New York senators — rather friendly to the place.
So I went looking for the support for this remarkable statement. Politifact rated a similar statement as true, based on some speeches she gave in 2007, and a plan she put forward in 2008. It is hard, however, to read this collection as a "warning that Wall Street is going to wreck the economy." It would be more properly termed "Grousing about consumers who can't afford their bubblicious subprime mortgages," and vague remarks about transparency and oversight. She devoted much more space in a key speech to the threat of sovereign wealth funds than derivatives, and her position on derivatives was that "Today, we need a sensible middle ground between heavy-handed regulation and a hands-off approach to a risk that can hurt the innocent, as well as the sophisticated buyer."
Meanwhile, she wanted the government to expand its lending, crack down on mortgage brokers, and get some more reports from the financial industry. Ratings agencies and non-bank mortgage originators also come in for some blame. Hard to find in these speeches: fiery attacks on Wall Street or banks. That's entirely unsurprising, given that we're talking about the foundation of much of New York State's tax base. But it can't really be retconned into Hillary Clinton, the Banker's Bane.
Nor can she be given credit for unusual foresight, since she was describing problems that were already apparent, not predicting the sort of widespread meltdown that took everyone by surprise. Clinton started complaining about subprime mortgages in 2007: after the market peaked, and after financial writers like myself had been writing about the housing bubble for years. Her plan for tighter financial regulation was issued in late March 2008, after Bear Stearns had already collapsed. This is a "warning" only in the sense that you are "warning" someone when you stand on the edge of a 200-foot cliff and shout "That's gonna hurt!" just as the plummeting body reaches terminal velocity.
These sorts of statements — wrong but complicated — are a staple of political campaigns. So are the sort that Sanders relied upon, in defending his Never-Never Health Care Plan.
Sanders's fight for single-payer might be wildly implausible, as a practical matter, but it seems to be very popular with the base. So Clinton had to explain why she's not getting on Senator Sanders's Single-Payer Express:
The Republicans want to repeal the Affordable Care Act; I want to improve it. I want to build on it, get the costs down, get prescription drug costs down. Senator Sanders wants us to start all over again. This was a major achievement of President Obama, of our country. It is helping people right now.
I am not going to wait and have us plunge back into a contentious national debate that has very little chance of succeeding. Let's make the Affordable Care Act work for everybody.
Now, as readers know, I am not a supporter of Obamacare. However, if you are, Clinton's boring and vague incrementalism is a much better bet than the Sanders idea. I don't say this as a policy matter: Obamacare is a hideous kludge, a hypertrophied Rube Goldberg device that not even its architects could truly love. I can definitely see how one would prefer something simpler and more comprehensive.
