• Charles Gasparino, Bought and Paid For, The Unholy Alliance Between Barack Obama and Wall Street, New York: Sentinel, 2010, 268 pages, $26.95.

Americans who have at least a modicum of political sophistication know that special interest groups have enormous power to influence the system, getting favors from government that they could not obtain through voluntary means. They know, for example, that many farmers receive subsidies, that big exporters benefit from Export-Import Bank financing, that labor unions have been given privileges to employ coercion that no other private organization has, and so on.

Few of us, however, have ever thought of Wall Street in a similar vein. Why, Wall Street consists of rich, Republican-leaning firms that make their money by financing business — right? Wall Street is interested in minimizing government because its business clients are harmed by the expansion of government — right?

Those notions could not be more mistaken, as veteran financial journalist Charles Gasparino demonstrates in his latest book, Bought and Paid For. Far from advocating a minimal, night-watchman state, the big Wall Street firms earn such enormous profits from financing federal debt that a shrinking state is the last thing they would ever want. An expanding government that borrows heavily guarantees buckets of money in their coffers — far more than the big firms make from the difficult work of business finance.

If that isn’t enough of a shock, Gasparino has many others in store. Most people would assume that wealthy Wall Streeters would have been scared silly of a candidate like Barack Obama, what with his progressive/radical/community-organizer past and redistributionist rhetoric.

The truth, however, is just the opposite. Obama was preferred by the top Wall Street CEOs, who regarded him as more amenable to their interests than Hillary Clinton and far more inclined to expand federal borrowing than any Republican in the 2008 field. It’s true that in 2009 as president, Obama gave Wall Street a tongue-lashing for its gigantic bonuses (bonuses made possible only by Obama administration policies), but that was pure political theater, Gasparino argues. Obama expects and will probably get the same high level of campaign support from Wall Street in 2012 that he received in 2008.

Compared with the likes of Wall Street giants like Goldman Sachs, other American special interest groups seem puny. The advantages of being a government pet deemed “too big to fail” are immense. “Goldman,” Gasparino writes, “was able to use its status as a government-protected business to gain access to billions of dollars of borrowed money at rock-bottom rates and then use the funds to buy bonds — many of which were the same as those that had helped cause the financial crisis, but were now trading at just pennies on the dollar.”

It’s not just Washington. Wall Street also has gotten rich by helping states and localities borrow and spend beyond their means. Consider the relationship between Merrill Lynch and supposedly prudent Orange County, Calif. Thanks to financial advice from a Wall Street consortium headed by Merrill, Gasparino said Orange County’s government went on a spending binge that seemed affordable. Unfortunately, the investments later crashed, leaving the county facing huge deficits. But Merrill had made its money.

The same is true regarding bankrupt Greece. Wall Street was happy to sell the Greek government advice on how to continue borrowing and hiding its looming fiscal crisis as long as firms got their fees up front.

Gasparino concludes that teamwork between the federal government and Wall Street means, “The big firms underwrite the massive amounts of debt being sold to keep the welfare state afloat, and the welfare state bails out the big firms from some of their most disastrous forays into risk.” The huge cost of that partnership is paid for by the rest of America in higher taxes and a sluggish economy.