Over at The New Republic today, Noam Scheiber is a lot more certain than I was yesterday about the likelihood that Republicans are going to lose their fight against financial regulation and pay a price for their obstruction and obfuscation while they are at it. For one thing, they are struggling to keep their own senators in line. And for another–and this will be a refreshing change of pace for progressives concerned about how health reform devolved–the dynamics of White House-congressional interaction on financial regulation are actually pushing the bill in a more, not less, progressive direction:
The reason the recent developments are so remarkable is that all reforms tend to weaken as they get closer to passage, as legislators hash out compromises with powerful interests in order to secure a deal. Bizarrely, financial reform appears to be headed in the opposite direction. When it comes to derivatives, at least, the bill Senator Chris Dodd moved through his Banking Committee in March was significantly tougher than the bill the House passed in December. Then, last week, Lincoln shocked Wall Street by producing an even tougher bill than that. “This thing is not a battle they’d anticipated,” says one administration official.
Scheiber attributes this trend to strong pressure from the White House, which is making senators like Lincoln look to other Democrats for support instead of offering early compromises to Republicans.
Speaking of Republicans, the macho bluster that usually accompanies their obstructionist tactics seems to be missing with financial regulation:
The one tactical question Democrats do agree on is that the GOP is ready to crumple. Last week much was made of Senate Minority Leader Mitch McConnell’s success at getting all 41 Republicans to sign a letter of opposition to the current Dodd bill. But Democratic Senate aides have been privately mocking the letter’s mealy-mouthed language, which is carefully parsed to afford its signees maximum wiggle room. “There’s no explicit threat to vote against [opening debate],” scoffs one senior Democratic aide. “It pledges to continue negotiating.”
Scheiber predicts that Democrats will eventually offer Republicans a face-saving compromise, but not right away:
[F]or the moment, the White House seems happier to make the banks and the GOP squirm. “Probably the way it’s playing out … [we’d] make them vote a bunch of times against [a tough bill], then compromise. You’d still have a strong enough bill, but peel off five to ten votes to get it done.” The idea is to force Republicans to pay a price for their reflexive opposition–“make them actually block it, not just say they’re going to block it”–before you finally throw them a lifeline.
If that’s right, this fight could actually produce not only a better bill on the merits than anyone really expected, but a much-needed political victory for the White House and congressional Democrats. This may be the only issue in sight where Senate Republicans take a real beating while being forced to back down, but it’s certainly an issue that Democrats would love to hang around their necks like an albatross.