Even as the Bushies are meeting behind closed doors with Wall Street, Republican and Democratic presidential candidates are trekking to Wall Street to sop up money, to an unprecedented degree. Last week, according to The Wall Street Journal, one of the Street’s biggest investment banks – Bear Stearns – has invited all the candidates to come by and make their pitches to the firm’s 500 managing directors, and then collect money. The CEO of Bear Stearns explained this will be far more efficient for the directors and the candidates than the current system in which each candidate’s Wall Street fund-raisers squeeze each Bear Stearns managing director. According to the Journal, Republican front-runner Rudy Guiliani and Dem front-runner HRC have already addressed the firm, answered the bankers’ questions, and sent around the hat.

I may be old fashioned, but I liked it the old way – when presidential candidates spent months trudging through New Hampshire and Iowa, addressing citizens at town meetings and in living rooms. It used to be that’s how candidates got known. Their reputations spread by word of mouth. Then, if they won the early primaries in Iowa and New Hampshire, the national media would spotlight them, and they’d emerge from obscurity to take the national stage.

Now candidates spend less time addressing coffees in Iowa and New Hampshire and more time addressing, well, investment banks. Partly this is because the presidential election now starts long before even the first state primary – which means the major candidates on both sides are already national celebrities.

They don’t need to spend time at meetings sponsored by the Des Moines Chamber of Commerce or by the Nashua, New Hampshire League of Women Voters. Everyone already knows Guiliani, McCain, Gingrich, Clinton, Obama, and Edwards. And now that several big-state primaries are being pushed forward to February 5, 2008, the candidates find it less important to address ordinary voters Iowa and New Hampshire

But its become more important to address firms like Bear Stearns – because that’s where the money is. The big-state primaries will be air wars, where the candidates duke it out in television ads, followed by a general election requiring even more TV ads. And TV ads cost lots of money. It’s estimated that the 2008 presidential election will cost a total of over $2 billion – most of it going into television advertising.

Not surprisingly, the national media – which has a strong financial stake in seeing this sum continue to rise – is already handicapping the primaries according to how much money each candidate has raised so far.

And where do candidates in search of big bucks turn? Increasingly, to Wall Street.
In 2004, Wall Street contributed a total of $339 million to candidates for federal office, according to the nonprofit Center for Responsive Politics. That’s about 60 percent more than the second-largest sources of funds, which were corporate lobbyists and lawyers. So, obviously, the candidates are eager to accept Bear Stearns’ invitation to address its bankers and answer their questions.

But as presidential politics morphs from town meetings in Iowa to investment banking meetings on Wall Street, you gotta wonder what the presidential candidates are hearing about America.

And you gotta wonder whether any of the presidential aspirants that now spend their time groveling on Wall Street will, if elected, make sure securities markets are working for the good of the nation – including small investors (see prior entry). And whether any of them will have the political guts to raise the marginal tax rate on the highest incomes – who often happen to be denizens of Wall Street – in order for the nation to have enough money to invest in our schools and health care for kids whose parents don’t work on Wall Street.