The Progressive Agenda Is Being Thwarted by Manchin, Sinema…and Mark Warner?

Why a blue-state Democrat is standing in the way of labor protections and higher taxes on the rich.

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In February 1986, a few dozen people gathered at the Federal Communication Commission’s Washington, DC, headquarters to watch pingpong balls pop out of a plastic drum. The winners of this lottery would get the rights to build some of the nation’s first cellphone networks. These spectrum rights were worth billions of dollars. The government was giving them away for free. 

All you had to do to get a shot at winning was slap together an application that claimed you wanted to build a cellphone network in a place like Yakima, Washington, or Manchester, New Hampshire. The winners didn’t actually want to build cell towers. Their goal was to win the lottery, then sell the rights to a real cellphone company. It was like house flipping, except the government gave you the home and it was worth more than most mansions. The trick was making sure you sold the rights for a good price. That’s where a young Harvard-educated lawyer named Mark Warner came in.  

Following the February 1986 lottery, Warner made a pitch to some of the winners, who’d banded together and agreed to divvy up the rights if one of them won. Instead of each of them selling their spectrum rights individually, Warner argued, they should hire him to sell their collective rights as a package. In exchange for getting them a better price, he’d take a cut. They took the deal. Warner sold the rights to six markets for more than $20 million. His cut equaled nearly $2 million in today’s money, which is about how much the average woman with a graduate degree makes over the course of her career. Warner would go on to find many more ways to profit—legally—off a once-in-a-generation government handout. 

Four decades later, Warner, now worth around $200 million, is a US senator at the center of some of the country’s most urgent debates about taxation and workers’ rights. The focus of the public and the press has been on two of his Democratic colleagues, West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema, whose performative centrism has stalled much of the party’s agenda. But on key policy items, Warner has joined them in opposing progressive action—and in the case of increasing workers’ ability to organize, he’s even ended up to Manchin’s right. 

Politically, this makes little sense: While Arizona went blue for the first time in decades in November and West Virginia favored Trump by nearly 40 points, Warner’s home state of Virginia hasn’t backed a Republican in a presidential election since 2004. But the story of how he got rich—and how he chose to interpret that stroke of fortune—helps explain why Warner remains a vestige of an earlier era of the Democratic Party, when centrists were in charge, business interests were a top priority, and the working class often took a back seat.

The senator’s most prominent break with his party has come on the PRO Act, which would greatly expand workers’ ability to form unions, secure collective bargaining agreements, and protect themselves from corporate retaliation. It passed the House in March with the support of all but one Democrat and of five Republicans. Warner is one of only three Democratic holdouts in the Senate, along with Sinema and her fellow Arizonan Mark Kelly. Warner has said he supports the majority of the bill but worries it’s too tied to a system that would treat gig workers as employees rather than independent contractors—a concern shared by companies like Uber that don’t want to be subjected to minimum wage laws and other worker protections. The bill doesn’t actually recategorize contractors, but it does give them the power to form unions.

Warner is one of the few Democrats opposing Biden’s effort to raise the corporate income tax rate from 21 to 28 percent. Warner, Manchin, Sinema, and Jon Tester of deep-red Montana prefer a 25 percent rate, well below the 35 percent rate that existed before Republicans slashed corporate taxes in 2017.

Warner is also one of the only Democrats who has spoken out against Biden’s plan to raise taxes on capital gains—money made from selling assets like stocks—from 23.8 percent to 43.4 percent for households that make more than $1 million per year. Warner has said he’s open to raising the capital gains rate but argues that the rich should still pay less in taxes when they make their money through capital gains than through salaries.

Warner, whose office did not respond to a request for comment, does support many progressive priorities, including a $15 minimum wage, and has emerged as a tough critic of tech companies. But he’s also not shy about resisting the party’s leftward drift. Speaking to members of the National Association of Business Economics in 2019, Warner warned that “modern capitalism is under assault in ways that are frankly unprecedented,” adding that the “extreme version of both political parties” scares “the hell” out of him. A Democratic Senate where people like Warner have a swing vote is never going to fully implement a Biden agenda, much less a more progressive one. 

Warner’s origin story could have sent him down another path. After benefiting from such enormous government largesse, he could have recognized that so much of what is now private wealth originated from collective goods that were given away to those with the right connections—that winning in today’s economy has more to do with connections than with contributions to the greater good. As a result, he might have concluded that the tax increases Biden is proposing are justified, or thrown himself behind a bill that would expand workers’ ability to organize. 

Instead, he formed a different interpretation of his early windfall: He took a risk on an emerging industry that revolutionized how Americans communicate, and his bet paid off. It’s the type of story that capitalists tell to defend capitalism. Happy to have that cellphone in your pocket? Then don’t begrudge me my fortune.

That narrative conveniently omits the extensive government role in enabling the fortunes of early digital entrepreneurs, including the government research that made Silicon Valley possible by inventing the internet, not to mention the heavily criticized spectrum-rights lottery that gave away massive wealth for free. But Warner chooses to suggest that young entrepreneurs follow his lead in working hard to pursue their fortunes. And he would prefer that the government—his major benefactornot take too much of the profits when they succeed. 

Unlike many centimillionaires, Warner can point to the fact that he grew up middle class. Despite relatively modest beginnings as a kid in Indiana, Illinois and Connecticut, he expected to become president from a young age. As an undergrad at George Washington University, he told his parents he wouldn’t be joining them on a White House tour he’d arranged for them, marketing professional Will Payne writes in his celebratory 2015 biography Mark Warner the Dealmaker: From Business Success to the Business of Governing. He planned to see the inside after he was elected. He graduated from Harvard Law School but never practiced law, opting instead to work as a Democratic fundraiser. 

Seeing how hard it was for candidates who lacked wealth to run for office, he set out to make money, Warner told Payne. His first two business ventures—one in energy, another in real estate—failed. His lucky break came in the early eighties in the form of a tip from someone he’d met through his travels as a Democratic fundraiser. Tom McMillen, a Rhodes Scholar, Atlanta Hawks forward, and future Maryland congressman, told Warner that cellphones were going to be the next big thing. 

Warner then used his political connections to get a meeting with Connecticut businessman David Chase, the Washington Post reported in 1996. After about 20 minutes, Chase agreed to put more than $1 million behind Warner’s efforts to profit off the government’s decision to give away cellphone rights. Working in Democratic politics had connected Warner to someone who knew where there was money to be made and someone else with the capital he needed to profit from that knowledge. 

Warner got started in cellphones by helping people put together the detailed applications for cellular licenses that the FCC was using to decide who should get spectrum rights. The process for making those decisions was taking years, and the FCC decided it’d be easier to do a lottery. Warner’s speciality became helping organize groups of investors to apply for the spectrum licenses, then reselling them after they won.

James Murray, who co-founded a venture capital firm with Warner, wrote in his 2002 book Wireless Nation: The Frenzied Launch of the Cellular Revolution that Warner learned a valuable lesson when he watched a client’s spectrum rights quickly jump in value from $200,000 to $1 million after one of the initial auctions. Warner’s cut of the sale equaled “the better part of a year’s pay for a few hours work,” Murray writes.

That windfall allowed Warner, whom Murray described as a man of “monumental ego” and “homespun charm,” to pitch his services to the winners of the February 1986 lottery. In getting the winners to let him auction off their spectrum rights to the highest bidder, he turned himself into the world’s first cellular broker. Murray acknowledged that many people saw Warner’s deals as a “travesty.” As Murray put it, “hundreds of lucky winners” got “rich on the backs of U.S. taxpayers.” Warner got rich by making sure they made as much money as possible. His maneuvering required drive and savvy, but there’s no real argument Warner did anything particularly valuable for the public. 

Following the 1986 auction, Warner co-founded a company called Capital Cellular. One of its innovations was setting up a stock market to make it easier to buy up tiny slices of spectrum. The founders made millions doing so, according to Murray. Warner then joined with Murray to help co-found Columbia Cellular, which brokered $4 billion in transactions between cellphone companies and lottery winners. Columbia Cellular led to Columbia Capital, a venture capital operation that still exists today. Along the way, he helped start the mobile phone company that became Nextel. 

The federal government came to see the lotteries as a massive mistake. Ronald Reagan’s FCC chair Mark Fowler called the lotteries one of the “biggest welfare programs in the country” as early as 1985. In 1990, Warner admitted to Fortune that the government had “basically given away tens of billions of dollars of an asset that is yours and mine and everybody’s in the country.” It wasn’t until 1993 that Congress finally allowed the FCC to auction off spectrum. Four years later, the commission reported to Congress that doing so had netted the US Treasury $12 billion.  

During Warner’s first bid for Senate in 1996, Donald Ritter, a former Pennsylvania congressman who pushed for the auctions, told the Virginian-Pilot that it was middlemen like Warner who’d been the main beneficiaries of the lotteries. Warner was trying to unseat a popular incumbent, and he was more defensive than he’d been with Fortune, telling the Washington Post that while there should have been rule changes, his critics were engaging in Monday-morning quarterbacking. At the time, Warner was spending millions of his own money trying to get into the Senate. Central to his pitch was the idea that he was a self-made man. 

Warner lost that election but would go on to become a highly popular Virginia governor. He started to be seen as a potential presidential contender in the lead-up to the 2008 election but opted to run for Senate instead. When Warner gave the keynote speech at the 2008 Democratic National Convention, he talked about how friends had dismissed his initial cellphone ventures. “But I saw a different future,” he said. “And with luck and a lot of hard work, I got in on the ground floor of the cellphone industry.” He went on to win his Senate race by more than 30 points. 

In Washington, Warner became known as a member of the “Mark caucus,” a quartet of moderate Democrats that included Mark Begich of Alaska, Mark Pryor of Arkansas, and Mark Udall of Colorado. Begich, Pryor, and Udall all lost in 2014, but Warner held on. After that election, Minority Leader Chuck Schumer elevated Warner to a leadership role within his Democratic Policy and Communications Center. His fellow Senate moderate, North Dakota’s Heidi Heitkamp, celebrated the announcement by saying, “We know he will be a great voice for business.” Four years later, Heitkamp was gone, too. 

Warner is not the only moderate Democrat left in the Senate. Nor is he a Republican in disguise: His voting record is far to the left of every Republican in Congress. But he has wound up much friendlier to business than most of his Democratic colleagues. The story Warner tells to help explain that stance is about a middle-class kid whose first two business ventures failed before he finally struck it rich on his third go. It’s a tale of successful entrepreneurship in a free-market system that sounds a lot better when you don’t know the details. 

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FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and billionaire owners wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2021 demands.

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