The Shell Game and the Collapse
Deregulation, Bipartisan Betrayal, and the Illusion of Prosperity
Part III of The Great Betrayal: How the GOP Orchestrated and Sold America to the 1%
When the Democrats took the stage, Bill Clinton emerged as a figure not unlike Ronald Reagan. Charismatic, business-friendly, and media-savvy, he embodied what came to be known as the “New Democrat.” His presidency would challenge traditional liberal expectations. The message was simple: “We can manage the economy better than the GOP—without raising taxes or regulation.”
But the reality was very different. It wasn’t a pivot away from Reaganomics—it was a repackaging. Neoliberalism became the new brand, peddled with charm and data points, but driven by the same pro-corporate, anti-labor philosophy. The betrayal didn’t end when the party changed—it deepened, cloaked in competence.
The Democratic Leadership Council (DLC) and the Corporate Democrats
The Democratic Leadership Council (DLC) rose to prominence in the late ’80s and early ’90s, pushing a vision of the party that was pro-market, anti-labor, and explicitly Wall Street-friendly. Bill Clinton was their perfect candidate: a polished centrist who could deliver reformist rhetoric while embracing deregulation.
To court big donors, Clinton worked to distance the party from unions and populist movements, reshaping the Democratic brand around “responsibility,” “opportunity,” and “free enterprise.”
The result was a kind of political rebranding—a soft sell of Reaganomics with better grammar.
“The era of big government is over.” Wait, that’s a GOP motto getting called out by the Left as well. The DLC created a bipartisan consensus on austerity, trade, and deregulation that would continue for some time.
NAFTA and the Offshoring Boom
President Clinton sticks around, runs to McDonald’s, and helps build a trade agreement that gets passed. The 1994 North American Free Trade Agreement delivered economic expansion between the U.S., Mexico, and Canada. What the country got was a massive job deficit and wage suppression.
The government essentially told the U.S. manufacturing base to move out, and they certainly did. This hollowed out manufacturing across the country, especially in the Rust Belt, the former industrial heartland of the country. Between NAFTA and the World Trade Organization (WTO) the door was open to a new era of “race-to-the-bottom capitalism.”
“America didn’t lose those jobs—we exported them for short-term shareholder gains.”
Financial Deregulation: Seeds of Collapse
As President Clinton’s final years approached, the Gramm–Leach–Bliley Act signed into law—repealing the Glass-Steagall Act and allowing the merger of commercial and investment banks. It was Wall Street’s dream scenario: bankers could now gamble with depositor money, blurring the lines between savings and speculation.
Just a year later, the Commodities Futures Modernization Act opened the floodgates further by legalizing “shadow banking.”
“Shadow banking” refers to financial activities that act like traditional banking—lending, borrowing, investing—but operate outside of normal regulatory frameworks.
This includes:
Hedge funds
Private equity firms
Structured investment vehicles (SIVs)
Mortgage brokers
And other financial intermediaries that don’t take customer deposits
These entities moved trillions of dollars but lacked the transparency, capital requirements, and oversight imposed on traditional banks. Regulators didn’t treat them like banks—so were unsupervised like banks.
This made them the perfect breeding ground for high-risk, opaque financial products like:
Mortgage-backed securities (MBSs)
Credit default swaps (CDSs)
Collateralized debt obligations (CDOs)
Meanwhile, Federal Reserve chair Alan Greenspan looked the other way. Regulators stepped aside, and faith in the markets replaced oversight. Left to self-regulate—just as it was being rewired for maximum risk and minimum accountability.
It was a setup—and both parties were in on it.
“Both parties signed off on financial weapons of mass destruction.”
The Bush Years: Debt and Disaster
In 2001, the second Bush presidency began with a familiar tune: tax cuts—twice.
One passed in his first year, and another followed in 2003. Both disproportionately benefited the wealthy, echoing Reagan’s playbook but in a post-Cold War, post-9/11 world.
The terrorist attacks on the World Trade Center shook the nation. The subsequent wars in Afghanistan and Iraq, along with unfunded domestic mandates, caused the federal deficit to balloon. But the illusion of prosperity persisted.
Homeownership policies were used to mask wage stagnation, encouraging more Americans to buy into the myth of rising wealth—on credit. Wall Street began inventing new ways to gamble, hiding risk behind acronyms:
Subprime mortgages
Collateralized Debt Obligations (CDOs)
Credit Default Swaps (CDSs)
These exotic instruments weren’t just financial products—they were time bombs. Every piece of risk was sold, repackaged, and resold—often to unsuspecting pension funds and foreign investors.
Too many things were stacked up. Too few understood the risk.
“They built a house of cards—and sold it as the American Dream.”
The 2008 Financial Crisis
“And Jill came tumbling after…”
In September 2008, Lehman Brothers collapsed, triggering the worst economic crisis since the Great Depression. One of the four pillars of Wall Street—alongside Goldman Sachs, Morgan Stanley, and Merrill Lynch—Lehman’s bankruptcy was the spark that ignited a global meltdown.
The housing bubble burst. Risky investments vaporized. Trillions in wealth disappeared overnight, and global markets spiraled. In the United States, the federal government responded—not by helping homeowners, but by bailing out the very banks that created the disaster.
CEOs kept their bonuses. Workers got pink slips and eviction notices.
There were no high-profile trials. No convictions. No justice. The men who built the bubble were not only spared—they profited.
“The economy didn’t fail. It succeeded exactly as designed—for them.”
Why This Matters?
Up to this point, the betrayal had been one-sided. But now, it was bipartisan. This wasn’t just GOP sabotage anymore—it was full political capture. Democratic complicity confused the public and muddled the blame. And the middle class? They suffered for believing the myths—and many clung to them until it was too late.
This disillusionment didn’t disappear—it festered into rage and distrust, particularly among white, middle-class men who felt abandoned. Enter their new champion: A reality TV star, a purported billionaire, and the man who’d spent years attacking Barack Obama on Twitter.
Donald Trump.
Coming Up in Part 4: The Populist Disguise (2009–2016)
How the GOP used the wreckage they caused to build a new brand of resentment politics.
The Great Betrayal continues…