Back From the Brink: 10 Years On

Secretive cabals, fear of immigrants and the tea party: How the financial crisis led to the rise of Donald Trump

Key Points
  • The tea party movement rose from the ashes of the financial crisis and became a formidable force in the Republican Party.
  • Donald Trump, in turn, seized the momentum built by the movement, attacking global elites as well as immigrants and demographic shifts in the U.S.
  • "The fringe groups are the things to look at if we want to understand what our future will look like," one historian says.
President Donald Trump raises his fist to the crowds during the 58th U.S. Presidential Inauguration after he was sworn in as the 45th President of the United States of America in Washington, USA on January 20, 2017.
Samuel Corum | Anadolu Agency | Getty Images

With four days left to go before the 2016 presidential election, was in a familiar spot: second place.

For more than three months, his Democratic opponent, Hillary Clinton, had held an untouched advantage in public polling. Private data collected by Trump's own party, shared that day with reporters, predicted that Trump would be handed a 30-point defeat in the Electoral College.

It was on that Friday that the Trump campaign launched its closing argument for the presidency, a last-ditch effort to win over voters in the battleground states that every major prognosticator said he would lose. In an unusually long two-minute ad that the campaign paid $4 million to air in nine target states, Trump railed against "those who control the levers of power in Washington."

"It's a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth, and put that money into the pockets of a handful of large corporations and political entities," Trump said.

In some ways, it was a political message that had been in the works for nearly a decade. The tea party movement rose from the ashes of the 2008 Lehman Brothers collapse and the subsequent global financial crisis to protest the "establishment" politicians that it saw running Washington. In other ways, it was a message that stretched back much further, tied up in the history of American financial panics — and the secretive cabals accused of inciting them — going back to the 17th century, according to historians.

The White House did not respond to a request for comment from CNBC.

Raging against the elites

If Trump's closing argument for the presidency attacked the legitimacy of the political system, his opening argument attacked the legitimacy of one particular politician: President .

In March 2011, as he first toyed with the idea of a serious presidential bid, Trump rose to prominence in the Republican field through his singular focus on Obama's birth certificate.

"The more Mr. Trump questioned the legitimacy of Mr. Obama's presidency, the better he performed in the early polls of the 2012 Republican field, springing from fifth place to a virtual tie for first," The New York Times wrote in 2016.

Read more: The Lehman Brothers collapse pushed the Democratic Party left

Of course, Trump's accusations were false. Obama was born in Hawaii, and is a U.S. citizen. But before Trump became president and launched his attacks on the "deep state" he saw as opposed to his presidency, latching onto Obama's place of birth enabled him to tap into the resentment that was bubbling up on the right among groups like the tea party, according to Ron Formisano, a historian at the University of Kentucky and the author of a history of the tea party.

The tea party movement rose up after the financial crisis as a fringe wing of the Republican Party. Its ideological underpinnings are often described as opposing government intervention in the economy. CNBC anchor Rick Santelli's "tea party" rant against bailouts in 2009 is cited as one of the movement's catalysts. Yet it was also aligned with the conspiracy theory regarding Obama's birth.

Santelli's rant heard round the world

Scott Reynolds Nelson, a historian who studies the politics of American financial crises, said that the tea party movement is precisely the type of fringe group that often rises up in the wake of an economic calamity. He said that after major panics, conspiracy theories can flourish, and elevate extreme politicians who seek to paint their political opponents as the root of the pain felt by voters.

"Political parties always sort of had plausible deniability when it comes to these fringe organizations, but these fringe organizations have a great deal of power," Nelson said. "The fringe groups are the things to look at if we want to understand what our future will look like."

Another target: Immigrants

Trump blamed the financial crisis on the secretive insiders who run the government, but he also had another target — immigrants.

Trump staked his campaign on a hard-line immigration stance, complete with mass deportations, a ban on Muslim immigration and a border wall paid for by Mexico. He also claimed that Mexico was sending violent criminals, including rapists, to the United States.

Ever since his political rise, many have credited Trump's appeal among white, working-class voters to economic anxiety. Struggling with unemployment and stagnant wages, the common narrative is that voters liked the populist anti-Wall Street rhetoric Trump used in his push toward Washington. That economic anxiety is tied to racial animus, experts argue.

"Resentment against bankers wasn't the only line he picked up on in his campaign for president," said Geoffrey Kabaservice, director of political studies at the Niskanen Center, a Washington think tank.

"No one is claiming immigrants had anything to do with the financial crisis, but that was an even more effective line of attack he had," Kabaservice added.

Indeed, the financial crisis made Americans more comfortable expressing views that were anti-immigration, according to a study published in the International Migration Review in July. Post-election survey data suggest Trump's appeal was mostly due to a fear of cultural displacement among white, working-class voters.

A more recent study in the Proceedings of the National Academy of Sciences also challenges the simple economic anxiety narrative. The findings suggest that white, Christian and male voters turned to Trump because they felt their status was at risk.

Could the 2008 Financial Crisis repeat?

Vanessa S. Williamson, a fellow in governance studies at The Brookings Institution, said that Trump's campaign boiled down to ethno-nationalism.

"The data are very clear on this: both tea party activists and Trump supporters were distinguished, not by deep concern about Wall Street, but by fears of immigration and ethnic minorities," Williamson said.

Concern for the future

In a divisive political climate, some argue that the tea party movement has staying power as more people grow anxious that traditional American values are being replaced by more socially liberal ideals. To the chagrin of Republicans, an embrace of progressivism has helped define this season's primary elections, with a number of surprise victories in Democratic primaries across the country.

Tea party conservatives, along with the president, rallied a base around fears that America was changing, leaving the white, male voter behind, and Trump's victory gave conservatives ground in their movement. But the midterms and 2020 election loom ahead, and Democrats threaten to unseat sitting House Republicans in the so-called blue wave they hope to ride into Congress.

"The Democratic base is energized. That makes a huge difference," said historian Formisano. "Resistance to Trump is extremely important and so many people, some who never were involved in politics before, are rising up. And meanwhile, Trump will keep riding the conspiracy theories, he'll keep riding his trade war, and he'll tell his loyal supporters that the Russia investigation doesn't matter."

Democrats have flipped more than 40 state legislature seats in special elections since Trump became president, including some deep in Trump country, have more candidates running for office then ever and are seeing increased voter turnout in the primaries.

On the other hand, the economy is doing well, and Democrats aren't as likely to vote in the midterms, according to NBC News. Strategists differ on just how powerful the forces are ahead of the November elections, and while some Republicans believe their party will maintain House control, most are far more concerned.

There's also widespread speculation about the future of tea party-style movements since Trump's victory. Trump successfully mobilized a population in which many fear foreign ideologies, experts say, and ran a campaign that fed these fears.

Yet while Trump ran as "an outrageous maverick," he is not an outsider, Formisano said.

"He made comments in primary debates about how the campaign finance system is broken, but he knows just how the system works," he added.