Susan Bysiewicz, Connecticut’s Secretary of State for more than a decade, intends to replace Democrat-turned-Independent Joe Lieberman when he leaves the Senate next year, and her campaign this fall is betting on lingering resentment at banks and other major financial institutions paying dividends at the polls a year after the emergence of Occupy Wall Street.
She’s going head-to-head with Congressman Chris Murphy, a moderately liberal Democrat brought to Congress in the Democratic wave year of 2006. Bysiewicz thinks she can connect with voters on middle class anxiety in an era where corporations and the wealthy are dominating politics, and pointed to the recently-released tax returns of Republican presidential hopeful Mitt Romney — which showed he took advantage of the “carried interest loophole” that allows private equity managers to pay a lower rate than regular earners — as an inspiration for her candidacy.
“The carried interest loophole came into the public discussion” thanks to the former Massachusetts governor’s campaign, Bysiewicz told The National Memo. “Romney paid 14 percent. One of the ways I’m different from my primary opponent is I am opposed to keeping that private equity loophole open and Chris Murphy voted in 2010 to keep it up. Really what this election is about is what kind of advocate do the people of Connecticut want to send to Washington? 25 percent of corporations in America pay no corporate income tax at all.”
But Democrats didn’t revolt against Joe Lieberman in 2006 because of his views on economic policy. It was his hawkish defense of the Iraq War and George W. Bush’s approach to the Middle East that alienated him from his long-time home in the Democratic Party, forcing him to run on his own party line after businessman Ned Lamont (with liberal netroots backing) stunned him in the primary.
“I couldn’t differ more with Senator Lieberman on foreign policy issues,” Bysiewicz said. “He was one of the initial sponsors of the legislation that supported the start of the Iraq War in 2002. And he was also one of the people leading the charge for the war in Afghanistan. And I’ve been opposed to both of those wars from the start.”
The United States military’s involvement in Iraq has come to an end, President Obama having kept a central campaign promise as he gears up for his re-election fight. The “surge” in Afghanistan the president initiated in 2009 — which many argue failed — has diminished support for that conflict too, even if it remains more relevant to combating the threat of terrorism.
Calling for a financial transaction tax, or FTT, of the type backed by the Occupy movement and for new help for struggling borrowers, Bysiewicz is poised to run a self-consciously populist campaign in a state that forgave former Attorney General and now Senator Richard Blumenthal for lying about serving in Vietnam because he could point to a record of standing up for the middle class.
“I support the idea of an FTT very strongly,” she said. “I like the idea of implementing a transaction tax that would tax high-volume trading, that would tax or penalize or put a fee on that kind of churning that goes on.”
She supports the legislation introduced this fall by Senator Tom Harkin of Iowa and Rep. Peter DeFazio of Oregon that would slap a .03 percent tax on transactions after the initial issuance of a stock or bond, though she acknowledged many view that as a meager revenue-raiser.
“You want to raise a lot of revenue? And I do support the Harkin and DeFazio effort to stop the Wall Street gambling, but I think that we can do more that would raise billions as well. And this is one of the defining issues here in this Senate campaign in Connecticut: if you want to raise billions, you can get rid of the carried interest loophole that allows hedge fund executives to pay much less than people who make earned income. And my opponent in the primary voted to keep that loophole open on May 28th, 2010.”
Murphy’s campaign responded by arguing that he supports closing the loophole and that the bill in question was unacceptable because it was too expensive.
“On this particular vote they’re [Bysiewicz’s campaign] talking about, Chris’ vote had nothing to do with his support of carried interest,” Murphy campaign manager Kenny Curan told the Connecticut Post. “He definitely supports closing this loophole and has used his voice and vote to do that. Overall this bill added $54 billion to the deficit. Chris just wasn’t comfortable with that.”
Besides instituting more progressive tax policy, Bysiewicz’s emphasis in a wide-ranging discussion that touched on the bank bailouts of 2008, the response of the Obama administration to the financial crisis, and more, was that helping homeowners underwater on their mortgages is paramount. This is how she means to contrast her campaign with that of Mr. Murphy, who beat out Bysiewicz in early fundraising and leads her in the most recent poll of the field.
“I think what you do to make Wall Street pay to help homeowners is, you say, ‘You’re going to reduce the mortgage principle and give homeowners a break so they can stay in their homes.’ I like the idea of reducing mortgage principle, which would reduce what the homeowners would have to pay. That would force the banks and bondholders to eat part of the cost, because in the end we want to make sure people are held accountable. Right now that is not happening.”
Her platform includes a rejection of the Troubled Asset Relief Program, or TARP, popularly known as the bailout of the banks that was thrust upon the country in a time of urgency, the fall of 2008. The program had come to be viewed as a surprising success until recent reports cast doubt on claims it has yielded net profits for the U.S. government.
“I would not have supported TARP, because what we had was a huge amount of money, in essence a blank check, that had no strings attached to it, that was given to some of the biggest bad actors in the financial crisis. It’s like rewarding kids for bad behavior. And I’m glad we got the money back, but at the same time, TARP, which by the way Congressman Murphy voted to support, highlights what is wrong with Washington.”
Many economists and politicians argued (and maintain still) that without a bailout, major American financial institutions would have gone under — and dragged the global economy deep into depression. For her part, Bysiewicz is skeptical.
“I think, it’s speculative to say what a no vote would have meant. I don’t think anybody knows that. But what’s important is, that we need oversight of the banking industry that requires them to have certain capital requirements so they are not way over-leveraged.”
The candidate slammed the Dodd-Frank financial reform bill, co-authored by Connecticut’s long-serving Senator Chris Dodd, as too little, too late.
“To fix this, you need to have capital requirements in the banking industry, the securities industry. It’s very important that we put that in place. Dodd-Frank didn’t fix that. We still haven’t fixed what caused this in the first place: [the lack of] appropriate reserves. There should be [Federal Reserve] requirements that make sure those are in place. And if anybody in this country is lulled into thinking Dodd-Frank will prevent this in the future, they’re sadly mistaken.”
Though she trails in the early polls, the former Secretary of State actually leads among the most liberal voters in the electorate, and she recently snagged the endorsement of EMILY’s List, a PAC that backs pro-choice women candidates. The primary will take place on August 14, assuming the Democratic Convention that meets earlier doesn’t definitively back one candidate or the other.
Follow Political Correspondent Matt Taylor on Twitter @matthewt_ny