WASHINGTON, June 11, 2014 — Eric Cantor’s campaign didn’t believe the trends of the polls leading into yesterday’s GOP primary election in Virginia. They do now; seeing is believing.
Republican establishment insiders still don’t appear to understand what happened on Tuesday and the GOP leadership is in a state of shock and disbelief. Dave Brat’s win over a 7-term incumbent with a massive campaign war chest at his disposal is rocking both the Beltway and Wall Street.
No one in the political establishment or among mass media oddsmakers saw a Cantor loss coming. As previously reported here, even an outlier poll from the independent polling group Vox Populi that showed Brat gaining on Cantor on Friday was dismissed by most observers. Even by that poll’s measurements, a 17 point turnaround in five days is historic.
Even those who suspected Brat could win didn’t imagine a 12-point margin of victory. And it can’t be dismissed as a consequence of low voter turnout; voter turnout was 37 percent higher for this primary than for Cantor’s re-election two years ago.
An unidentified Senior Republican leadership aide told the National Journal, “We’re absolutely stunned. Honestly, we really can’t believe it”, describing the election results as creating “chaos for the leadership ranks.” Given the unexpected outcome, that may be an understatement.
It’s not just the GOP establishment that is reeling from Brat’s upset win. The implications are reverberating in America’s financial hub, Wall Street. Cantor was considered a solid supporter of the ruling elite among the investment class. The Center for Responsive Politics’ Open Secrets.org shows that Cantor’s largest contributors were from the Securities and Investment category, and notably topping the list were employees from Blackstone, Goldman Sachs and Altria. Open Secrets reported that Cantor had received $1.4 million from the financial services industry.
The U.S. Chamber of Commerce and the Business RoundTable are busy looking at whatever their Plan B strategies might be as well. Jia Lynn Yang, writing in Washington Post’s “Wonkblog” notes:
For one, they lost a major defender of their favored policies — from the beneficial tax treatment of private equity income to immigration reforms favored by the country’s biggest tech companies. But even worse for their prospects, Cantor lost to a challenger who specifically attacked him for his close ties to big business — going so far as to single out the BRT and the Chamber.
Another Cantor benefactor that is no doubt conducting an after-event briefing is Silicon Valley. Mark Zuckerberg’s consortium of tech giants lobbying for higher H1-B worker quotas within a larger immigration bill — FWD.us — would have been a major beneficiary of Cantor’s efforts to land the Senate’s immigration reform bill, or something that resembled it, in the House. With Cantor gone, the clear message of his defeat to other house members sitting on the fence is, amnesty and increases in guest worker permits are doomed.
The American Chemistry Council, (ACC), an industry consortium of such corporate giants as Bayer, Chevron, Celanese, Dow, DuPont, Eli Lilly, ExxonMobil, Honeywell, 3M, Occidental Petroleum, Proctor & Gamble and Shell, funded a flood of TV advertising, to the tune of $300,000 to help secure Cantor’s re-election. Now they are looking at the loss of a trusted ally.
The Wall Street Journal’s “Washington Wire” tagged their headline on the Cantor defeat, “Eric Cantor’s Loss A Blow To Wall Street”. In the report, Brody Mullins references the implications for the Washington–Wall Street axis:
Since he was first elected to Congress, Mr. Cantor, a Virginia Republican, has been Wall Street’s go-to guy on issues big and small. His first committee assignment was on Financial Services Committee where he became steeped in policy matters that affected the industry. His defeat will create new uncertainty for pending legislation backed by Wall Street. Mr. Cantor in the past had bypassed conservative Republicans and worked with Democrats to approve a bill to reauthorize the Export-Import Bank.
Among the consequences of Cantor’s unexpected loss is the 2 percent drop in Boeing’s stock price since Tuesday and a ripple effect on other players who benefit from the Export-Import Bank. The prospect of a populist avalanche raises a red flag to corporate America. The term “Crony Capitalism” is catching fire in a most unlikely place — the Republican party.
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What’s more, this election strongly contradicts the narrative examined earlier here, that voters are repudiating the Tea Party.
The GOP Establishment had better learn the answers to the questions raised by Cantor’s defeat and learn them quickly. It’s not just the radicals who are suspicious of the incestuous relationship between Washington lawmakers and corporations; the besieged middle class is suffering from the income slump and jobless recovery, and it doesn’t like that relationship either.