Elizabeth Warren Wants Us to Look Under the Hood

OK pundits, you can stop speculating about which Democratic candidate will be the first to go after Joe Biden. Elizabeth Warren wins that race. She’s been going after him since the mid-1990s.

Biden was then a U.S. Senator and a champion of “bankruptcy reform,” by which he and many of his peers meant legislation making it harder for people to go bankrupt or purge their debts. (This and other good Warren stories are well told by Emily Bazelon in the current New York Times Magazine.) Filings for bankruptcy had been on the rise, and Congress seemed willing to blame the filers: they had spent beyond their means (too much “Tommy, Ralph, Gucci and Prada,” as Newsweek put it), knowing they could take advantage of a permissive legal system – that was the theory that prevailed in the halls of power.

Warren was a law professor who had studied the data and concluded otherwise, tracing 90 percent of consumer bankruptcies to a job loss, a medical problem, a divorce or the death of a spouse. And the economic consequences of such events, she noted, tended to hit women harder than men. In a 2001 journal article, Warren criticized feminist organizations for the “limited scope” of their policy concerns, pointing to consumer debt and bankruptcy rules as neglected “women’s issues.” The National Organization for Women (NOW), as it happened, had singled Biden out for praise as a sponsor of the Violence Against Women Act. Warren suggested that NOW would be equally justified in censuring Biden for pushing bankruptcy reform. “Why isn’t Senator Biden in trouble with grass-roots women’s groups all over the country, and with the millions of women whose lives will be directly affected by the legislation he sponsors?” she asked.

While the government was tightening the screws on consumers, it was loosening the rules for lenders. A series of deregulatory measures and court decisions had wiped out the effectiveness of the state usury laws that once restrained interest rates across the country. Banks were beginning to stick their customers with unreadable and unnegotiable contracts containing “gotcha” fees that made debt costlier and harder to escape than it appeared. The politicians of Biden’s state, Delaware, had played a large role in letting this happen, and they had collected heaps of money from Delaware banks and financial institutions while they were about it.

Warren wondered aloud if there might be a connection between that money and the drive for bankruptcy reform. Biden did not take kindly to the inference. “I am so sick of this self-righteous sheen put on anybody who wants to tighten up bankruptcy,” he commented during one of the Senate hearings with Warren as a witness.

At a subsequent hearing (shortly before final passage of the bill in 2005), Biden acknowledged the validity of some of Warren’s testimony, but added that she really ought to be complaining about credit-card interest rates, not about bankruptcy reform. Warren replied that she would gladly complain about both; since Biden was not proposing to cap interest rates, however, she didn’t think it was right for him to “take away the last shred of protection from these families.”

At the time, Warren had no thought of running for the Senate, no less the Presidency. But she had already begun to pick a fight that she continues to wage on the 2020 campaign trail. It’s the fight against a three-decades-long process of rewriting the rules of the U.S. economy to the benefit of corporations, banks and the ultra-wealthy, and it pits her against a long line of Democrats who, with varying degrees of enthusiasm and awareness, have helped that process along.

Warren started out as a Republican, and she is eager to tell anyone who asks (or doesn’t, like Bazelon) that her favorite president is Teddy Roosevelt. The Teddy she has in mind is the trust-buster, who fought monopoly not only for stifling competition and consumer choice — the only objections recognized by today’s Supreme Court — but as a threat to democracy. “If you go back and read his stuff,” Warren told Bazelon, “it’s not only about the economic dominance; it’s the political influence.”

She admits to a fondness for Teddy’s cousin Franklin as well. But while other New Deal fans focus on the safety net and spending programs, Warren emphasizes FDR’s efforts to regauge the rules of the economy and, as Bazelon writes, “the significance of the legislation (like the Glass-Steagall Act) that Democrats passed to rein in bankers and lenders and the agencies (the Securities and Exchange Commission and the Federal Deposit Insurance Corporation) that they put in place to enforce those limits. Warren credits this new regulatory regime, along with labor unions, with producing a golden era for [white male] workers over the next four and a half decades” and, alongside the many enduring injustices of the postwar era, “the greatest middle class the world had ever known.”

Like Warren, most of the Democrats running for President see rising inequality as a problem. What sets Warren apart is her preoccupation with the underlying rules of the economy and her explicit rejection of the Clinton (and perhaps the Biden) theory that Democrats can solve the problem by throwing programs at it. “It’s structural change that interests me,” Warren told Bazelon. “And when I say structural, the point is to say if you get the structures right, then the markets start to work to produce value across the board, not just sucking it all up to the top.”

That is Warren’s rationale for proposing, along with her impressive plans for things like student-debt forgiveness and a wealth tax, legal action to break up the tech giants, legislation to reestablish the Glass-Steagall wall between basic banking and Wall Street speculation, and a sweeping anticorruption bill that would close the revolving door between Congress and the world of corporate lobbying.

These are not easy sells. Warren worries that she will have trouble getting voters to open the hood and ponder the components of the economic-justice engine. “It’s like teaching class,” she says. “’‘Is everybody in here getting this?’ And that’s what I just struggle with all the time. How do I get better at this? How do I do more of this in a way that lets people see it, hear it and say, ‘Oh, yeah.’”

It’s a message that may or may not help Warren win the Presidency. But she already has people listening. That’s one of the best things to be said for the contest up to now.

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