Will Financial Regulatory Reform Be a Break With Legislative Trench Warfare?
Based on the stimulus fight, the budget fight, the climate fight, and the health care right a pretty clear pattern of legislative activity in the 111th Congress has shaped up. First you get an Obama administration proposal. Second, most liberals think it doesn’t really go far enough substantively but politically it’ll be hard to pass. Then uniform Republican opposition emerges. Then you need to deal with a bloc of 40-60 House Democrats and a dozen or so Senate Democrats who demand substantial watering down. Then you get into a kind of trench warfare and if anything passes it does so by the skin of its teeth on highly partisan votes.
Ezra Klein said yesterday morning that he thought financial regulatory reform might be different:
Unlike health-care reform, where Republicans really don’t want a bill and will happily reject all manner of bids, there is reason to believe that both sides want some new financial rules in place. Republicans weren’t any happier than Democrats when the banks held them hostage last year. Joining with the banks to kill financial regulatory reform doesn’t look like a popular move.
He elaborated in the afternoon:
The politics of this, in fact, look to be the reverse of the politics of health-care reform. There, Democrats were fairly united with industry actors, but aggressively opposed by the conservative base, and Republicans ended up siding with their base and their electoral prospects rather than with the pharmaceutical industry. The Republican attack has been populist in nature. On this, you could see the liberal and conservative bases largely agreeing, while industry actors join in opposition. The battle lines might cut the establishment (the Federal Reserve, the banks, etc.) from the grass roots more than they separate the two parties. As my colleague Binya Appelbaum reminds me, “populism” referred to a skepticism of elites setting monetary policy long before it became shorthand for a difference between the left and the right.
Maybe. But I kind of doubt it. Mitch McConnell’s intial response to the Dodd plan seems like a very typical root-and-branch rejection. And the reality is that Tea Party populism is uninformed and completely incoherent. Tea Parties claim to believe they wish the government hadn’t rescued the banking system last fall, but I haven’t seen a single sign at a rally or a single quote from a rallier to suggest support for enhanced regulation. Glenn Beck isn’t calling for enhanced regulation. The Koch family isn’t going to start busing people to pro-regulation rallies.