Michael Hirsh wonders why Obama is not working to get a strong financial reform bill passed before the election. Evidently, he's left it up to the retiring Chris Dodd to get some old thing passed and then he'll swoop in at the last minute and twist some arms. It would appear that they really do believe the their strategy on health care was a big success.
It did pass. But one would still expect them to have assessed how that particular legislative strategy may have not been a perfect model since it was barely resurrected from the dead by dint of sheer stubbornness by Nancy Pelosi and a few others. And since most people think it nearly died because the White House left everything (but their own deals with industry) in the hands of congress to bargain away in small bits to salve every ego in Washington, one might think it would be a good idea not to rely on that particular strategy again. One would be wrong:
What's most disturbing, however, is the president's on-again, off-again focus on financial reform. Despite its arcane nature, the issue is still a politically hot topic as we head into a fall election with the economy still rocky and Wall Street apparently still unrepentant and unrestrained. "Everybody's just deferring to Summers and Geithner. Doesn't the president realize he's got a big flank exposed here?" says one Democratic staffer who is pushing for tougher restrictions on Wall Street. "We get through health care, we finally have the opportunity to do something positive on Wall Street reform and we just go ahead and focus on nuclear disarmament and climate change?"
The bottom line is that apart from a new "resolution authority" used to take over and liquidate failing nonbanks—a power that is likely to affect what happens only after the next crisis hits—the Dodd bill is fast turning into a nonevent. And that may become more likely if the Connecticut senator seeks yet again to compromise with Republicans, watering down the bill further (for example, by stripping the Consumer Financial Protection Agency, which Dodd has already housed at the Fed in deference to the GOP, of some of its independent powers). Compromise will become the easier path as the economy gradually improves, the memory of the Wall Street–engendered crash recedes and Dodd approaches his retirement desperate for a legacy. "We're gonna wake up one day, tomorrow or two weeks from tomorrow, and there's going to be a deal between Dodd and the Banking Committee Republicans," the Democratic staffer says. And that will be the end of reform. One can only hope the president realizes what's at stake.
It's a miracle they pulled off any kind of health care bill considering their ham handed strategy and we'll soon find out how much political damage they caused by allowing months and months of chipping away at a delicate system with many moving parts. That strategy cannot be seen, by any stretch, as successful on its own terms.
In any case, financial reform is not health care reform. It's very important, but it doesn't directly affect many average citizens' lives and does not carry the moral imperative that HCR does, certainly among the liberals. Passing something lame is not "laying the groundwork" for something better, it's just passing something lame. It's not creating a huge new program or establishing something important that can be built upon later. This is a fairly simple set of regulations and new regulatory structures which have a targeted job --- eliminate or reduce the systemic risk that caused the meltdown of the global financial system in the fall of 2008. They need to do this right.
I'm sure the White House would love to have a lovely bipartisan bill symbolizing a new day of peace, love and understanding. And maybe they'll get it. But they'd better watch out. There are Democrats on the left who feel zero obligation to play ball on a bill that benefits big banks and whose loyalty to the White House was badly frayed during the last year. And there may be some Republicans on the right who refuse to play ball for any number of reasons, not the least of which is to deny Obama any kind of bipartisan victory. So Obama will likely have to stitch together a coalition of his favorite "centrists" from both parties to put this thing together and hope that he can beat a filibuster in the Senate. (How many of those are there?)It seems to me that if it's going to be that kind of a dog fight he might as well get a decent bill. So far, it doesn't look as if he particularly wants one.
Why the White House doesn't want the Democrats to have even one issue that speaks to the electorate's populist fervor this fall is a question for the age.