In a 17-page memo titled, "The Language of Financial Reform," Luntz urged opponents of reform to frame the final product as filled with bank bailouts, lobbyist loopholes, and additional layers of complicated government bureaucracy.

"If there is one thing we can all agree on, it's that the bad decisions and harmful policies by Washington bureaucrats that in many ways led to the economic crash must never be repeated," Luntz wrote. "This is your critical advantage. Washington's incompetence is the common ground on which you can build support."

Luntz continued: "Ordinarily, calling for a new government program 'to protect consumers' would be extraordinary popular. But these are not ordinary times. The American people are not just saying 'no.' They are saying 'hell no' to more government agencies, more bureaucrats, and more legislation crafted by special interests."

In Republican circles Luntz's words, which have helped the party score win the message wars over health care and other legislative battles, are often treated as gospel. Already, some of the advice he's offered on regulatory reform has found its way into the political discourse -- with a proposed Consumer Financial Protection Agency seemingly on life support under Republican objections.

In addition to tying regulatory reform to a massive government takeover, Luntz's memo includes several other data points and messaging suggestions as a blue print for the legislation's defeat. Opponents, he writes, would be well served to link the package to the financial industry bailout (which, it should be noted, is fundamentally not part of the legislation). According to accompanying polling data, 52 percent of voters said they would be "much less likely" to vote for their member of Congress if they voted for a financial reform bill that contained a fund to bail out banks and Wall Street.

"Public outrage about the bailout of banks and Wall Street is a simmering time bomb set to go off on Election Day," Luntz wrote. "Frankly, the single best way to kill any legislation is to link it to the Big Bank Bailout."


[...]

Luntz does seem to acknowledge that the climate makes defeating regulatory reform a bit trickier. At the top of his memo he urges opponents (primarily Republican lawmakers) to "acknowledge the need for reform that ensures this NEVER happens again," He insists that "the status quo is not an option" and that members of Congress, when addressing the crisis, "never forget its impact on your audience." Luntz even advise his audience to promote themselves the agents of change.

But for the sake of winning the debate, he adds, it is vital to insist that such change does not include additional Washington-based regulatory powers.

"Many of the same members of Congress responsible for the legislation that helped create the housing bubble and the Wall Street financial crisis are now attempting to create another new government agency with an unlimited budget and almost unlimited regulatory powers," wrote the GOP wordsmith. "I'm sorry to say this but they don't know what they're doing. They have gotten it wrong time and time again..."

In the wake of the Massachusetts Brown out -- or -- hastened by that event -- the Democratic Senatorial Campaign Committee wants their Senate candidate to emphasize two main points on the campaign trail: pin down Republican opposition to a tax on banks -- and pin down Republican support of the Citizens United decision, which would open the door to increased corporate influence in American elections.

73 percent of Americans say that Washington hasn't done enough to regulate Wall Street, according to the new NBC News/Wall Street Journal poll. This is one reason why Democrats plan to schedule a series of votes on campaign finance -- and to try to bait Republicans into voting yes. This is one way for Democrats -- in power -- to run against powerful interests.

The argument over this bailout is going to be with us for a long time to come and unless Democrats play this right, they are going to wind up holding the bag. The "populist Republican" meme is alredy out there and starting to take hold. They've bet on this economy getting very bad and being able to blame the hated Bush and Clinton for causing it and then blame the Democrats for throwing money at the problem and failing to solve it.

Why would the Democrats let them do that?

Right now I'm watching Pelosi and Reid, Frank and Dodd stand there all by themselves taking "credit" for this bill. They are handing out plaudits to all the others who "helped" them get it done like members of "the Hills" at the MTV awards.

The optics are all wrong. If they really feel they have to do this thing each one of them should have a Republican under each arm every time they make an announcement.

The tea bag parties are a lot of fun and I will be among the first to mock and jeer tomorrow. But it's not a good idea to ignore their potential for serious business down the road if the economy continues to be under stress. Whether they are organized by Republican hacks or not, if they provide people with a way to understand their current circumstances, they could end up being a problem.

I am a worrywart about these things, I know. But it continues to concern me that in the absence of a clearer explanation of what caused this financial meltdown and resultant recession, people will simply fall back on the conservative propaganda of the past two decades to explain their problems. And that is an opportunity the Republicans should not be given.

Here's a random comment I lifted from a story about the tea bag parties:

The Tea Parties are TAX PROTESTS. The bailouts are a hot topic, & their cost & mismanagement are made possible by the oppressive & counterproductive tax system we have in place now.

I know that's convoluted, but it fits very comfortably in the rhetorical grooves that have been deeply worn into our political dialog for decades. What the GOP wants to do in this moment is channel anger at the bailouts to the Democrats and taxes. After all, they don't want the anger to be pointed at the corporations and the wealthy --- that's their bread and butter --- and they want to find a way to take political advantage. So the familiar language of the tax revolts are being employed to redirect the populist anger at Wall Street and the wealthy to the government.

Here's Stephen Moore from yesterday's Hardball trying to squeeze all this into a coherent form:

STEPHEN MOORE, “WALL STREET JOURNAL”: Well, you know, if you think back to the Reagan era, you know, when the kind of Republican revolution was really begun, Chris, remember that was started on the heels of Proposition—remember Proposition 13...

MATTHEWS: Sure.

MOORE: ... in the summer, I think, of 1978. So I‘ve actually been to a few of these tea parties, because remember, a number of them have happened already around the country and some of them are happening later in the week, many of them are on April 15th.

The one thing that really struck me when I was at one in Wisconsin was that this really isn‘t something that‘s being driven, A, by the Republican Party, or B, by the national conservative groups. You got to give credit where credit is due on this, Chris. It really is a genuine kind of grass roots thing that just spontaneously combusted around the country.

And so I think it‘s mainly people—and by the way, one last point.

It‘s not so much about taxes, Chris, it‘s about the bail-outs. People...

MATTHEWS: OK...

(CROSSTALK)

MATTHEWS: So it‘s the notion that—as Rick Santelli well put out, this notion that, basically, people out there who were totally unreliable, who brought homes they shouldn‘t have paid for...

MOORE: That‘s right.

MATTHEWS: ... people who helped them buy those houses they shouldn‘t have bought, are now getting our money.

MOORE: That‘s it! That‘s exactly right, Chris!

The people I talk to, yes, they are upset about taxes, and they are upset about debt, but they really think, fundamentally, that the bailouts of the banks, the bailouts of the homeowners who took out bad mortgages, the bailouts to the auto companies...

MATTHEWS: Well, where we these...

MOORE: ... it‘s unfair.

MATTHEWS: OK.

MOORE: They think it‘s unfair and unwise...

MATTHEWS: Well, the question I have—back to you, Steve—is that a lot of this money—I love the fact that some of the newspapers are printing the checks. They are showing what the checks look like, at least recipients of the checks, the beneficiaries of all this bailout money.

It‘s not Joe Blow from San Diego. It‘s somewhere in New York in a big bank.

(LAUGHTER)

MATTHEWS: I mean, the checks are being made out to rich people in these bailouts.

MOORE: Well, that‘s what makes people angry, Chris.

I mean, you‘re exactly right. I mean, look, nobody was more angry than I was when people were getting bailout—when they were getting bonuses for—for companies that lost billions of dollars.

It adds to the sense of frustration that real people—and these are middle-class folks. These are not people who are rich in three-piece suits. And the thing I would say about this is, I really think it‘s not partisan. I really believe, Chris, if Republicans were doing the policies the Democrats were doing—and this—you‘re right.

This started under George Bush, no question about it—that people are just angry that Washington isn‘t listening to the little guy.

Stephen Moore as a populist is pretty hilarious, but there you have it.

As you can see they haven't quite been able to find the right rhetorical formula yet either, but they are getting closer. The key is to find a way to turn the anger at the bankers into anger at Obama for bailing them out. Right now most people don't feel that taxes are the proximate cause of the nation's problems but a prolonged recession along with continued bailouts could change that if the conservatives can find a way to synthesize their anti-tax message with the current populist anger.

Right now, Obama's popularity is keeping that at bay. But nobody should believe that people are supporting the government's actions because they understand Keynesian principles or that the government has to solve the liquidity crisis because they don't. And Democrats have not exactly made a compelling case for liberal economics lately other than a vague promise that it's better than the other guys' in the wake of gilded age excess. We certainly didn't see any serious discussion of it during the campaign when everyone was talking about lowering taxes and extolling Reagan.

An awful lot of what the government is doing right now feels completely counter-intuitive and there is plenty of legitimate anger that these wealthy pricks just can't shut up and refuse to take responsibility. And also keep in mind that much of what the government is doing, such as stimulus, is as much preventive as anything else, and nobody ever gets much credit for preventing problems only solving them. (I would guess that Roosevelt was given so much slack by the public because he inherited 20% unemployment and a deep national despair, something that Obama -- fortunately! --- doesn't have.) The sheer complexity of the issues and the failure of the Democrats to articulate an alternative economic philosophy leaves a mile wide opening for right wing demagoguery.

We don't know what these tea bag parties are going to bring tomorrow. It's likely they will be McCain rally freak shows, of which they really are an extension. But if they manage over the next few months to get a coherent message together and the corporate backed front groups can successfully manage them, they could turn into something more troubling --- a right wing populist movement aimed at government. Not good.