Word has it that the Dems are gearing up to tackle financial reform soon. It’s not a surprise. Given the bruising they just took over Obamacare, they’re eager to take up an issue more voter-friendly.
A group of Democrats, joined by Senate Majority Whip Dick Durbin of Illinois, are planning an aggressive spring offensive to strengthen key provisions of the financial reform bill — and daring Senate Republicans to vote against them.
“Given that [large financial firms] steered this country into the ditch, it’s going to be very hard to stand up on the floor and say don’t do financial reform or do it without teeth,” said Sen. Byron Dorgan (D-N.D.). “There are a number of people in our caucus who feel like there are things that can be done to strengthen it.”
…“If they pass something and it’s relatively strong, it’s seen as a big victory for consumers, and if they get a strong Republican pushback, electorally Democrats think they would benefit from it,” said a Democratic aide for a member involved in the effort.
Read more: http://www.politico.com/news/stories/0410/35642.html#ixzz0kx208XN9
It’s actually a smart move. Wall Street is about as popular as their own health care bill. The Dems will be able to tap into voter anger at the banks and will argue that they’re preventing the next crisis, all while framing Republicans as the bankster’s evil cronies. Conservatives, of course, know better. Each financial reform bill coming down the pipeline adds more layers to the existing bureaucracy. We can expect higher bank fees, decreased and more expensive access to credit for individuals and businesses of all sizes, and of course, a future crisis brought on by an unforeseen side-effect of the proposed legislation.
Real reform involves fixing the perverse incentive structures in the current system. The moral hazard created by various Federal Reserve initiatives, aspects of the FDIC, and whatever goodies are offered up by whatever Goldman Sachs alum-turned-bureaucrat is in a position of power at a given time each contributed to the financial crisis. And of course, let’s not forget Freddie, Fannie, affirmative-action lending, and similar pieces of legislation that set the housing market on a one-way path to bubble city.
Unfortunately, given the political realities in DC, there may not be much that conservatives can do to transform the current bills into positive legislation. At this point, we must focus instead on minimizing not only the economic consequences but also the political damage that we could very well incur should we appear to be on the wrong side of the fight over financial reform. This issue could very well blunt some of our momentum going into November, and given the importance of retaking the House to prevent funding of various health care initiatives, fighting the tax increases that the Dems will offer up to conquer mounting deficits, and controlling the narrative for the 2012 election, that is simply a chance we cannot take.
This fight has been framed terribly for Republicans. The Democratic aide in the above quote has it exactly right. Already this battle has been described as the consumer vs Wall Street bankers, and we’re poised to appear to be fighting on the side of one of the least popular groups in America. Fortunately, one thing more unpopular than Wall Street is bailing out Wall Street. And fortunately (from a political standpoint), each of the proposed bills has a mechanism to entrench the Federal bailout trough. Republicans must play up this aspect of the legislation to have any hope of turning this fight into a win.
And we need to start by referring to it simply as the “Bailout Bill.” “Financial Reform” has a positive connotation, when none is deserved for the proposed bills. Additionally, “Bailout Bill” does a considerably better job actually describing the legislation. Regardless of whether or not one has been following this debate, does the term “Financial Reform” actually make it clear what the bill entails? No, but the term “Bailout Bill” makes it quite clear. Let’s face it, the Republican leadership in the Senate isn’t exactly the most charismatic bunch. Do we really want to see them on TV droning on about the intricacies of what’s wrong with the “Financial Reform” legislation? No, the typical viewer most likely neither cares nor is knowledgeable enough to accurately assess Mitch McConnell’s criticisms. Boehner, Pence, and Ryan would do a better job, but nevertheless, the topic isn’t particularly engaging. The term “Bailout Bill” delivers the message to the viewer in a clear and concise manner.
On top of that, it throws the Dems’ attempts to appear to be combating “special interests” right back in their faces. Regardless of your opinion of Ron Paul, he brought up a great point this weekend when he referred to Obama as a “corporatist” (although the other part of his statement was wrong…Obama has shown both corporatist and socialist tendencies). We need to harp on about how this “Bailout Bill” will forever put taxpayers on the hook for Wall Street’s misdeeds. The public already knows that Democrats have been handing out goodies to special interests: auto companies, big Pharma, unions, and even the insurance companies. Let’s hammer it home. The Dems of course will respond that Wall Street will actually be the ones paying for the bailouts since special taxes on the banks will go into a bailout trust fund. This may be true, but it requires that the public trust that these funds won’t get looted in the future, something with which Washington doesn’t exactly have a stellar track record (see: social security). Additionally, as seen during the health care debate, the more that proponents of the legislation have to defend its complex and unpopular components, the more difficulty they will have selling the entire package.
It’s unlikely that Republicans will be able to halt or significantly alter this legislation. However, it is imperative that we not let it dent our chances in the mid-term elections. Democrats know that it has the potential to boost their standing with the public, which is why we must frame this debate so that it aligns with our existing narrative going into November. The “Bailout Bill” expands the size of the federal government, damages the economy, neglects taxpayers, and entrenches special interests. Let’s make that clear, starting with the name.