Why both parties pushed their populist messaging around GameStop and Robinhood

• The GameStop stock trading fiasco offers a look into the role class plays in American politics.
• Both Democrats and Republicans called for financial accountability after Robinhood froze trades.
• Voter and economic data paint a more complicated picture around the notion of the middle class.
• Visit Business Insider’s homepage for more stories.

The GameStop short squeeze has become a quintessentially American story. But the David vs. Goliath narrative of the multi-billion dollar saga overshadows what it’s shown about the role class plays in American politics.

As bizarre as the whole thing has been – Reddit users pitted against wealthy hedge fund investors, online memes jolting the market, financial pundits losing their minds – Democrats and Republicans have approached it in a largely predictable manner, at least from a messaging standpoint. For all of its very online and very 2021 quirks, the response to GameStop-gate from Democrats and Republicans is indicative of their longer standing battle for credibility among middle class voters.

The bipartisan call for Wall Street accountability is about curating the appearance of being the party of working Americans and avoiding any perception of coziness with wealthy investors.

Wall Street vs. Main Street

Once the trading app Robinhood halted its users from buying the surging GameStop stock amid reported credit issues, a bipartisan chorus of federal lawmakers called for hearings and a reckoning for the finance industry.

This rare flourish of bipartisanship was cemented in a widely shared agreement between Republican Sen. Ted Cruz of Texas and Democratic Rep. Alexandria Ocasio-Cortez of New York.

—Dave Portnoy (@stoolpresidente) January 28, 2021

(Ocasio-Cortez AOC quickly rejected Cruz's overture, telling him "You almost had me murdered 3 weeks ago" in a tweet referencing the Capitol Siege.)

The opportunity politicians on both sides of the aisle saw in the GameStop-Robinhood fiasco demonstrated how the Democrats and GOP operate in an era of growing economic inequality.

Both parties try to present themselves as allies of the working class. Both decry the greed of Wall Street and emphasize they're on the side of the proverbial Main Street, yet they cannot agree on basic components of the next stimulus package. 

Republicans vehemently oppose the notion of wealth distribution, while Democrats are in favor of increased taxes on the rich and frequently campaign against GOP candidates as out of touch wealthy elites, as they did during their sweep of the Georgia Senate runoffs.

How we define "working class," "middle class," and other commonly used terms varies widely, especially when compared to the economic data. 

Pew Research has an ongoing social and demographic trends study on middle class Americans, and their January 2020 report chronicled how this coveted voting block has lost its overall share of earnings in the American economy over the decades - and that was before the pandemic began accelerating economic inequality in the US, particularly by gender.

Around 70% of Americans identify as middle class, but only 52% lived in a middle income household in 2018 based on tax data analyzed by Pew.

Despite the shrinking influence of the middle class economically, they are still the primary broad messaging target for both parties. 

'The party of wage earners'

As Democrats and Republicans duel over which party is the true champion of the middle class, notable shifts have happened over the past few election cycles with income and party affiliation.

A Pew study found that in many states, those earning $100,000 or more vote overwhelmingly for Democrats. In states like Massachusetts and Maryland, that number is as high as 60%. But states like Indiana and Tennessee have the reverse dynamic, with more than 60% of their six figure earners identifying as Republicans.

Surveys on perceptions of the parties show Americans still view Republicans as wealthier than Democrats.

A landmark 2016 study by Douglas Ahler and Gaurav Sood found respondents believed 38% of Republicans earn more than $250,000 per year, when in reality that income bracket only accounts for 2.2% of registered Republicans.

In the 2020 election, counties that voted for Democrats accounted for 70% of GDP. While that does not mean that only wealthier Americans voted for Democrats, it does show that President Joe Biden significantly outperformed Donald Trump in affluent parts of the country. It also marks a continued shift from 2016, where Hillary Clinton's counties made up 64% of GDP.

Well before the votes were in for the 2020 election, Fox News host Tucker Carlson began work shopping new messaging on the "Republican Party becoming the party of wage earners."

—August Takala (@AugustTakala) November 4, 2020

 

The GameStop fiasco shows that amid mounting income inequality, being seen as on the side of Wall Street is politically toxic for both parties, and they will do almost anything to avoid such a perception. 

Passing a stimulus package with broad bipartisan support, however, remains beyond the pale, despite whatever glimmer of hope the anti-Robinhood bonhomie may provide otherwise.