The Bills

How Elizabeth Warren Wields Power

Even without running she’s forcing the Democratic candidates to look out for consumers.

Elizabeth Warren
Sen. Elizabeth Warren speaks in Washington on Oct. 1, 2015.

Photo by Jonathan Ernst/Reuters

Sen. Elizabeth Warren spent the better part of 2015 fending off the pleas of her many supporters. No matter how many times she claimed she would not run for the presidency, no matter how emphatically she said no, many refused to accept her answer.

The Boston Globe all but begged Warren to enter the fray. So did many others. The manager of the super PAC Ready for Warren, formed for that one purpose, claimed, “We can’t afford not to have her voice in the 2016 race.”

No need to worry.  Warren’s voice and the economic issues she is passionate about are present in this race—and in other places, too—even without the possibility of her name appearing on any ballot.

There’s a political benefit to being the girl who got away. Instead of fighting for attention during the Saturday night Democratic debates, Warren is idealized. As Amber Phillips noted in the Washington Post earlier this month, “In staying out of the 2016 spotlight, Warren’s presence (and popularity among the Democratic base) are paradoxically looming even larger over the Democratic primary.”

Take Social Security. Until this year, the way for candidates to sound serious about protecting Social Security was to claim the program was in financial trouble. In a 2012 debate with Mitt Romney, President Obama claimed the program needed to be “tweaked.”

No longer. In late March, Warren—along with West Virginia Sen. Joe Manchin—thrust Social Security into the spotlight by adding an amendment to a congressional budget resolution calling for an increase in benefits. The move seemed like so much political theater. After all, there was zero chance the measure would pass the Republican-controlled Congress. But the deft legislative maneuver forced Senate Democrats to take a stand on the issue. As Mother Jones enthused prophetically, “Warren just turned Social Security expansion—once a progressive pipe-dream—into a tough-to-ignore 2016 issue.”

No kidding. Now, all three Democratic candidates are competing to expand the program. Martin O’Malley and Bernie Sanders are calling for increasing retirement benefits, while Hillary Clinton is advocating a tax credit for those who take time out of the paid workforce to manage family responsibilities. On the other hand, with the exception of Donald Trump, all the leading Republican contenders are campaigning on promises of raising the retirement age or taking other steps to cut back on Social Security payments, likely setting up a clear contrast for voters in the general election next year. (Marco Rubio, for example, supports raising the retirement age and would increase benefits for low-income retirees by reducing the growth in benefits for wealthier seniors.)

Warren also contributed to breaking a five-year logjam over a Department of Labor effort to expand investor protection for retirement accounts. At the beginning of the year, the effort appeared to be foundering, derailed yet again by fierce financial services industry pushback.

Enter Warren. She held hearings, made speeches, and released attention-getting reports, with titles such as “Villas, Castles, and Vacations: How Perks and Giveaways Create Conflicts of Interest in the Annuity Industry” (We wrote about it!), publicizing how financial advisers steered clients into investments that benefited their own bottom lines and still didn’t run afoul of current law. She drew attention to how the financial services industry paid academics to write studies that just happened to agree with their viewpoints on issues. (We—along with just about everyone else—wrote about that too!)

The increased attention to a previously obscure regulatory issue ultimately pushed all the Democratic candidates to announce their support for the proposed change, which is known as the fiduciary standard. That included Sanders, who in 2010 signed a letter opposing a previous version of the revised standard of customer care, claiming it would burden Vermont companies offering workers employee stock ownership plans. A finalized rule is expected from the Department of Labor in 2016.

On the issue of college affordability, this year, as in years past, Warren introduced legislation that would permit student loan borrowers to refinance at lower rates.  Like with Social Security, Congress dinged Warren’s student-loan initiative. But in the Democratic primaries, the debate is now over whether tuition at public colleges should be free, as Sanders advocates, or if families should be required to pay what they can afford, as Clinton supports. “She succeeded in pushing the debate on student loans to the left,” declared Politico’s Allie Grasgreen.

In other areas, Warren’s produced bottom-line action and results for individual people. When Corinthian Colleges, a for-profit chain, closed earlier this year amid widespread allegations students were tricked into taking on loans to attend the school by recruiters lying about job placement rates, advocacy groups spent months lobbying the Obama administration to set up a process for the now former students to apply for debt forgiveness.

Left unresolved: the tax consequences of officially voiding the loan. Tax law counts forgiven debt as income and bills accordingly. It appeared the students whose debt was dismissed would need to once again prove they were victims of fraud, but this time not to the Department of Education but to the Internal Revenue Service. It took months of pressure to get the IRS to agree not to pursue the claims. Would this have happened without Warren? The Huffington Post says no.

It wasn’t all victories, of course. Social Security recipients aren’t getting a cost of living bump for 2016, thanks to low inflation. Warren introduced legislation calling for a one-time payment to Social Security recipients of $580, tying it to a think-tank study showing CEOs at the top 350 firms received a 3.9 percent increase in pay in 2014. Despite the support of Sanders, the proposal hasn’t garnered much public attention. An effort to push the Commodity Futures Trading Commission into requiring more skin in the game from banks in derivative trades also stumbled, despite Warren’s claim this failure would be “the nail in the coffin for Dodd-Frank’s effort to regulate risky derivatives.”

But the issues of regulating Wall Street and the economy will remains front and center in the Democratic campaign. Sanders, O’Malley, and Clinton—who finds herself pressed time and again to square her tough talk on the financial industry with all the campaign donations she’s collected from the sector—would do well to consider Warren, if not quite an unofficial challenger, a powerful campaign presence.