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.

So the Senate is preparing for a vote to debate financial regulation legislation, and a partisan slugfest with potentially large electoral consequences is fully underway.
Democrats hope they have gotten Republicans into a tight space that will finally make them accountable for the contradiction between pro-corporate policies and populist rhetoric. The GOP, with its anti-bailout rhetoric, has already worked hard to make voters forget that TARP and other financial community bailouts were their own party’s idea, imposed by their own president and supported by their own party’s congressional leadership. But since their opposition to tough regulation of the financial sector is a lot less ambiguous than their opposition to bailouts, its opposition to the present legislation poses more than a small problem, since even voters who aren’t crazy about government regulation of the private sector generally are largely in favor regulation of the financial sector.
The GOP’s solution has been to oppose regulation as–surprise, surprise–bailouts! That’s why the White House is reportedly pushing for the removal of a “liquidation fund” from the bill that was the only real connection in reality to the Republican claims that it would create “endless bailouts.” Moreover, Democrats have made a lot of hay out of meetings between Wall Street potentates and GOP Members of Congress, who have created a more-or-less united front against the regulatory initiative.
The latest twist and turn in this war of words is also pretty interesting: instead of denying their strategerizing with Wall Street, Republican congressional leaders are simply claiming that Democrats take money from Wall Street, too! The fairly transparent aim here is to muddy the waters, reinforce preexisting public perceptions that both parties are in bed with Wall Street, and then count on general anger with “Washington” to give them victory in November.
It’s a pretty cynical but rational strategy, but it’s not clear it will survive a Republican filibuster against the main tangible effort to regulate Wall Street since the financial collapsse, much less a protracted fight between now and November. Certainly Democrats have a big stake in blowing away the smoke and exposing the real positions of the GOP on financial regulation, and needless to say, in going the extra mile in keeping their own political petticoats clean and starchy on this subject.

For those Democrats looking for a little political sunshine on the horizon, I wrote an essay published by Salon over the weekend that examined reasons for Democratic optimism and Republican caution that will emerge once the midterm elections are over.
I made three basic points: (1) the very turnout patterns that will help Republicans in 2010 will likely be reversed in 2012, with the current GOP focus on appealing to older white voters becoming a handicap rather than an advantage; (2) for all the talk of “fresh faces” emerging from the midterms, it is extremely unlikely that any of them will emerge quickly enough to run for president as Republicans in 2012; and (3) the existing Republican presidential field is at least as weak as the 2008 field, and could produce a weak nominee. That’s all totally aside from the facts that the economy could improve by 2012, that the president remains relatively popular, and that Republicans may be unable to offer a credible alternative agenda for the country.
While I was by no means making any predictions for 2012, I did provoke a cranky response from RealClearPolitics’ Jay Cost, who fired back a post suggesting I didn’t much know what I was talking about. Why? Because, well, young voters might trend Republican (since they did back in the 1980s), Republicans might amass enough “angry white voters” to overwhelm the rest of the electorate in 2012, and Democrats have nominated “dark horses” before so it’s ludicrous for any Democrats to suggest Republicans can’t do the same in 2012.
Lordy, lordy, so much heat in response to a piece mainly suggesting that Republicans should try to curb their enthusiasm–a suggestion that Cost himself has often made to those in both parties who see every positive development as augering a divinely dictated permanent majority. Yes, Jay is right, anything’s possible. Young voters may do a 180-degree turn in their political attitudes between 2008 and 2012, but it’s unlikely. Yes, it is always possible to amass a large enough lead in one demographic category to win any given election, but it’s doesn’t happen often, and it’s a particularly perilous strategy when that category is gradually shrinking as an element of the electorate. And no, I don’t know, just as he doesn’t know, who the Republican nominee for president is going to be in 2012.
But Jay doesn’t deny my most basic point that the well-known age disparties in midterm versus presidential turnout happen, at this moment in political history, to be helping Republicans disproportionately in 2010, and could accordingly disappear as an advantage, and even become a disadvantage, in 2012. Republicans like Jay need to think about that, and not just complain that the observation isn’t a scientific prediction.
As for the presidential field, I was actually making two separate points that Cost seems to conflate: the first is that the loose talk about “fresh faces” emerging from the current cycle and brushing aside the early GOP field is a dangerous delusion; it rarely if ever happens, and didn’t happen in the four elections Jay cites as counter-examples. He’s on stronger ground suggesting that “dark horses” (not “fresh faces”) could emerge, but doesn’t deal with any of the specific problems I mention about the currently available “dark horses,” other than to mock them. And yes, it’s possible that Pawlenty’s Sam’s Club Republican bit will finally catch on. Maybe insider enthusiasm for Indiana Gov. Mitch Daniels will become communicable to actual voters outside Indiana. Perhaps Rick Perry and Jim DeMint aren’t as crazy-sounding to swing voters as they sound to Democrats. But if I were a Republican, I would be a mite more worried than Cost seems to be about my weak presidential field, and a mite less confident that weak fields somehow magically produce strong “dark horses.”
The bottom line is that the natural GOP tendency to extrapolate a good, or even very good 2010 to a good 2012 misses some pretty basic problems that could plague today’s high-riding party before too long. And if you don’t believe me, ask former President Bob Dole.

WaPo columnist E. J. Dionne, Jr.’s “The Tea Party: Populism of the privileged” provides a clear-eyed case that the Tea Party is more a media creation than an authentic, new movement. Reporting on the findings of a CBS/New York Times poll released last week, Dionne’s explains:

…The Tea Party is essentially the reappearance of an old anti-government far right that has always been with us and accounts for about one-fifth of the country. The Times reported that Tea Party supporters “tend to be Republican, white, male, married and older than 45.” They are also more affluent and better educated than Americans as a whole. This is the populism of the privileged.
…This must be the first “populist” movement driven by a television network: Sixty-three percent of the Tea Party folks say they most watch Fox News “for information about politics and current events,” compared with 23 percent of the country as a whole..

As for the characterization by the easily-suckered segment of the MSM that the Tea Party is a ‘populist’ movement, Dionne cites “a tendency of Tea Party enthusiasts to side with the better-off against the poor” which “puts them at odds with most Americans.” Dionne adds,

…The poll found that while only 38 percent of all Americans said that “providing government benefits to poor people encourages them to remain poor,” 73 percent of Tea Party partisans believed this. Among all Americans, 50 percent agreed that “the federal government should spend money to create jobs, even if it means increasing the budget deficit.” Only 17 percent of Tea Party supporters took this view…Asked about raising taxes on households making more than $250,000 a year to provide health care for the uninsured, 54 percent of Americans favored doing so vs. only 17 percent of Tea Party backers.

And despite Tea Party supporters protestations to the contrary, Dionne notes that “race is definitely part of what’s going on,” citing the poll’s findings that 52 percent of Tea Party loyalists say “too much” is “being made of the problems facing Black people,” compared to just 19 percent of those who are not loyal to the Tea Party. Dionne adds that “A quarter of Tea Partiers say that the Obama administration’s policies favor blacks over whites, compared with only 11 percent in the country as a whole.”
The danger, says Dionne:

…Both major parties stand to lose if they accept the laughable notion that this media-created protest movement is the voice of true populism. Democrats will spend their time chasing votes they will never win. Republicans will turn their party into an angry and narrow redoubt with no hope of building a durable majority.

It’s a useful insight. Dems should not be deterred from their progressive mandate by the same old wingnut segment of the vox populi that has been around for many decades, all gussied up in tri-corner hats as a 24-7 Fox News ‘reality’ show.

This commentary from noted Democratic strategist Mike Lux, author of The Progressive Revolution: How the Best in America Came to Be, is cross-posted from The Huffington Post.
Between health care reform, financial reform, and analyzing the fascinating and disturbing trends in right wing ideology over the last 15 months, I haven’t written that much about the 2010 elections lately, but that will be changing in the months to come. This election season will be intriguing.
Back in March of last year, I started warning my fellow Washington, DC Democrats that we could be headed for a 1994 style train wreck if we didn’t watch out. By following the Geithner/Summers plan to coddle the big banks and accept the classical trickle-down economic idea that “jobs would be a logging indicator,” I feared we were both discouraging base voters and ticking off working class swing voters. My worst fears proved in the New Jersey, Virginia, and Massachusetts elections, as working class swing votes turned against us with a vengeance and Democratic base voters – young people, unmarried women, and people of color – did not turn out to vote in very high numbers.
It is way too early to tell what will happen in November. There are signs that Democrats are starting to understand what they need to do to improve their chances. The passage of health care reform shows that Democrats have the guts and ability to get big things done. Pushing back harder and picking a fight with the big bankers and their Republican allies (thank you, Mitch McConell!) is incredibly important, and the Obama administration has been willing to do that. Going to the mat for immigration reform will help turn out Hispanic and young voters. And if the real economy – meaning jobs and wages, not the stock market or bankers’ profits – starts to see real improvement, Democratic performance in 2010 might surprise some people. However, it’s still too early to tell how all this is going to play out.
One thing that is clear to me, though, is that the mood of voters is more anti-establishment and anti-incumbent than it is purely anti-Democrat. When a formerly popular Republican Governor Charlie Crist is being trounced by 30 points in the polls to a previously unknown far right-winger like Rubio, when a republican icon like McCain is struggling with a primary challenge, and when a longtime, well-liked Republican Senator like Chuck Grassley sees his approval rating go from the mid 70s to the low 40s in a year, you know that voters’ ire is at least as much about incumbency as it is about party.
In that context, I want to raise a big red flag about one of the most traditional strategies political parties fall back on in a challenging election cycle, which is what I call the “defend the flag” strategy. The assumption is that they have to defend all incumbents at all costs, and give up on challengers breaking through. I think that is a major mistake in an anti-incumbent, anti-establishment year like this one. Usually, party committees and the numbers prove that in an average election cycle, saving incumbents is easier than electing challengers. In a year like this one, I think it’s a huge mistake for Democrats to make. It’s the outsiders, the anti-establishment, anti-status quo candidates who have more traction in this election.
In Florida, Kendrick Meek has a very solid chance at taking out far right extremist Rubio after he wins his ugly primary fight with Crist. In Ohio, both Lee Fisher and Jennifer Bruning are strong candidates to take out a Bush administration hack in Rob Portman. In NH, Paul Hodes is strongly positioned to win the Gregg’s Senate seat given the nasty primary on the Republican side. In Missouri, Robin Carnahan is a very appealing alternative to Tom DeLay’s closest ally in Roy Blunt. In Kentucky, if Jack Conway wins that primary, his reformer credentials give him a solid shot at beating extremist libertarian Rand Paul. And in Iowa, crusading anti-corporate lawyer Roxanne Conlin might have the stuff to beat ancient insider Grassley. These would all be pick-up seats for the Democrats. That’s 6 races where Democratic challengers have a decent shot at taking a Republican seat.
My strong advice to my friends at the party committees and in the donor community: don’t forget about races like these. Pulling back and playing only defense to save incumbents and seats we currently hold is a formula for bigger losses this year. We have a chance at holding our own this cycle if we play some offense well.

Michael Bocian and Andrew Baumann of Greenberg Quinlan Rosner Research have a post, “Aggressive Wall Street Reform: A Win-Win-Win for Democrats” at GQR‘s web page (via Politico), which should give GOP leaders a headache. Up until now the Republicans have had Dems cornered on financial reform, as the authors explain:

Politically speaking, Democrats should relish a debate over Wall Street reform…Democrats remain in a dangerous position heading into November. Their deteriorating position is driven almost entirely by a drop in their standing — not by any improvement of the Republicans…A lot has to do with the public’s worries about spending and government, coupled with their continued economic struggles.
But it is exacerbated by the voters’ views that Democrats have put Wall Street’s interests ahead of their own. For example, almost 48 percent of voters said “government’s policies to deal with the economic recession” helped big banks a lot, according to an Economic Policy Institute survey, conducted late last year by Peter Hart, the Democratic pollster.
Just 3 percent agreed that government’s policies helped “the average working person” or “you and your family.” Our own recent poll for Democracy Corps found that a 46 percent plurality of voters think Obama and Democrats put bailing out Wall Street ahead of creating jobs for ordinary Americans.

But, with health care reform out of the way, Dems can now focus on improving their image with respect to reforming Wall St. Baumann and Bocian present some convincing data pointing to a Democratic advantage:

A high-profile Senate debate about Wall Street reform could help reverse this. The political benefits could be even broader, according to bipartisan survey for Pew last month.
It revealed that voters want action that holds banks accountable…Indeed, 42 percent said “making big Wall Street banks repay the bailout money they received” was “one of the most important things for Congress and the president to work on.” In a list of 8 possible priorities, only “creating jobs” (43 percent) was higher.
The House bill includes an amendment that requires the banks to repay TARP funds. It looks politically smart for Senate Democrats to include a similar provision…In fact, a robust debate about Wall Street reform would have multiple political benefits for Democrats. Our polling reveals that pro-reform messages generate intense responses from Democratic voters, while also appealing to independents.

Further,

After hearing arguments for and against a strong reform bill…64 percent of voters favored reform, according to recent national survey of 1000 registered voters that we conducted with YouGov…Fully nine-in-ten of Democrats backed the measure, including 55 percent who did so strongly, while independents favored reform by a solid 55 to 45 percent margin. Even 39 percent of Republicans supported the bill.

Strong Wall St. reform is a certain victory for Dems, argue Bocian and Baumann, because it “puts Republicans in a terrible position — forcing them to give in and hand Obama another victory. Or to side with Wall Street banks and their lobbyists — whom the public loathes” and generate headlines like “Republicans Huddle With Lobbyists to Kill Financial Reform Bill.”
All of which gives Dems some much-needed leverage for improving their overall image and their creds with respect to financial reform in particular, while opposing Republicans will be forced to defend the institutions that the public believes is responsible for the meltdown. Should be fun to watch.

As noted the other day, the British party leaders (PM Gordon Brown for Labour, David Cameron for the Conservatives, and Nick Clegg for the LibDems) has their first-ever televised debate yesterday, and it was a pretty good show. I was asked to write up a reaction for Newsweek.com, and here’s the link.
As you can read there, I thought they did a pretty good job for beginners at this sort of thing. The bottom line politically is that Nick Clegg was the runaway “leader,” which is particularly bad news for Cameron’s Tories, who are desperately trying to boost their vote above 40% or so to win a parliamentary majority, and need every “change” vote they can get.

Having been repulsed rather decisively in their efforts to get Democrats to oppose health reform, pollster Doug Schoen and all-purpose svengali Pat Caddell return to the op-ed pages of the Washington Post with even worse advice for Democrats, if that’s possible.
You can trudge through their pastiche of Rasmussen poll findings about the terrible political shape of the Democratic Party, if you have the stomach for that. I don’t think any Democrats are laboring under the misimpressin that everything’s fine right now, and I really don’t see the point of Schoen and Caddell’s triumphant conclusion that Obama and Democrats got no big bounce out of enacting health reform; nobody’s claiming they did.
But it’s the strategic path they lay out for Democrats that’s really astounding. They think Dems should shift to an “agenda aimed at reducing the debt, with an emphasis on tax cuts.” Aside from not explaining how, exactly, that differs from the approach of the Republican Party, Schoen and Caddell suggest this vast shift to the right in order to–get a load of this–win over the “swing voters” of the Tea Party movement. They base the swing voter attribution on an out-of-context finding by the Winston Group that 28% of tea partiers call themselves independents and 13% call themselves Democrats. That means, of course, that 57% self-identify as Republicans (compared to less than a third of the general public), and two-thirds self-identify as conservatives. But none of this self-identification data matters nearly as much as the actual views of the tea partiers, which, as was demonstrated once again by yesterday’s very detailed NYT/CBS survey, place them in the conservative base of the Republican Party.
These “swing voters,” by over 90%, dislike anything and everything about Barack Obama and the Democratic Party. Their only unhappiness with the GOP is that it isn’t always conservative enough to suit them. They are predominately faithful Fox viewers. They exhibit considerable nostalgia for George W. Bush, and almost unanimously absolve him of any responsibility for either the economy or budget deficits. There is no “agenda” that can bring them around to supporting Obama or his party short of total surrender to the GOP, or in effect a reversal of the last general election, which, believe it or not, has as much authority as a single special election in Massachusetts or this week’s Rasmussen polls.
Democrats don’t need to hate or fear the tea partiers; they reflect a strain in the population, and particularly in the GOP, that’s always been there (a majority of them, after all, are over 45) , and that’s been radicalized by various events of the last couple of years. But lusting after them as “swing voters” would be the height of folly.
Schoen and Caddell need to give it a rest, lest Democrats begin to wonder why they don’t just go ahead and join the party that’s already committed to the spending cut/tax cut agenda they consider the ticket to political paradise.

This item by TDS Co-Editor William Galston is cross-posted from The New Republic.
The new journal National Affairs is attempting to recreate the vanished, much lamented Public Interest along more orthodox conservative lines. While a lot of its content is predictable, some articles have opened up space for a productive conversation. Donald Marron’s recent contribution, “America in the Red,” is one such piece. Although I disagree with his specific prescriptions for our long-term fiscal ills—for example, he suggests 40 percent of GDP as a long-term target for the national debt, which I think is unrealistically low—his diagnosis is credible, and several of the strategic points he makes about how to respond are important.
To begin, Marron makes an effective case that long-term fiscal imbalances matter—a lot. Among the reasons:
•Once the economy gets back on its feet, prolonged deficits and mounting debt will weaken economic growth.
•Prolonged debt will likely fuel concerns about inflation and will eventually induce lenders to demand an inflation premium on interest rates.
•As the share of our debt held by foreign lenders increases, we will become vulnerable to pressure on a number of diplomatic fronts.
•The growing debt—and especially our dependence on short-term debt instruments—exposes us to greater rollover risk.
•Rising debt limits flexibility by limiting our ability to borrow more if and when we are faced with another calamity.
•Finally, deficits feed on themselves as the logic of compound interest works against us.
Marron goes on to make some strategic points that liberals should take seriously. Among them:
•A key objective is to stabilize our debt to GDP ratio at a level that does not impose a heavy burden on economic growth. He recommends 60 percent as a plausible interim target. While others might prefer a lower or higher figure, few think that 90 percent, which is where we’re headed by 2020 unless we change course, is acceptable.
•Even with optimistic assumptions, we cannot hope to grow our way out of the problem. And given demographic and political realities, we cannot solve the problem with spending cuts alone, or with tax increases alone. We need both.
In perhaps the most challenging part of his article, Marron implicitly addresses both liberals and conservatives. He reminds liberals that not all spending programs and tax increases are created equal: some tend to spur growth, others retard it. And because growth is so important to a sustainable future, we need to take those consequences of our fiscal choice seriously.
At the same time, he questions the assumptions that guide much conservative fiscal dialogue. What he says is worth quoting:

Policymakers should not always assume that a larger government will necessarily translate into weaker economic performance. As few years ago, Peter Lindert—an economist at the University of California, Davis—looked across countries and across time in an effort to answer the question, “Is the welfare state a free lunch?” He found that countries with high levels of government spending did not perform any worse, economically speaking, than countries with low levels of government spending. The result was surprising, given the usual intuition that a larger government would levy higher taxes and engage in more income redistribution—both of which would undermine economic growth.
Lindert found that the reason for this apparent paradox is that countries with large welfare states try to minimize the extent to which government actions undermine the economy. Thus, high-budget nations tend to adopt more efficient tax system—with flatter rates and a greater reliance on consumption taxes—than do countries with lower budget. High-budget countries also adopt more efficient benefits systems—taking care, for example, to minimize the degree to which subsidy programs discourage beneficiaries from working.”

This is an example of the kind of conservative thinking—empirically based and open to argument—with which liberals can and should engage. This kind of thinking is the only basis on which the necessary grand bargain between Republicans and Democrats can be struck.
Everyone knows what the grand bargain will look like, at least in broad outline. Relative to the current baseline, revenues must rise substantially, but in the way most conducive to long-term economic growth. Relative to the current baseline, expenditures must fall substantially, but without hurting those who are least able to make it on their own. And there is no way to do this without modifying the large programs whose mandated spending rises in response to demographic and technological change. Congressman Paul Ryan will not get his way. Nor will the National Committee to Preserve Social Security and Medicare. The only real questions are how long it will take us to get where we must go, and how much damage we will inflict on ourselves by delaying the inevitable.

Embattled Florida Gov. Charlie Crist, already being bludgeoned to near political death by fellow Republicans backing his Senate rival, Marco Rubio, took a step today that probably ended his career in GOP politics. He vetoed legislation that would have made placed Florida on the far frontier of experiments in test-based “merit pay” for teachers, while also phasing out teacher tenure. Backed by most Florida GOPers, the bill was considered something of a pet project for former Gov. Jeb Bush (generally considered the power behind Rubio), and had bitterly polarized the state, generating mass protests by teachers and students on the one hand, and angry GOP attacks on teachers unions on the other. Indeed, Republicans sometimes seemed to describe the bill as less about education than about union-busting. It would certainly do more to link teacher pay and job retention to students’ standardized tests results than most proponents of “pay for performance” are comfortable with.
Crist had often hinted he would sign the bill, but then engineered a week of suspense over his intentions, capped by a dramatic announcement one day before the bill would have become law without his signature.
His action will immediately revive rumors (which Crist and his Senate campaign have constantly denied) that he will fold his primary campaign and file for candidacy as an independent. As fate would have it, a new Quinnipiac poll just out today shows Crist narrowly ahead in a three-way general election race with Rubio and likely Democratic nominee Kendrick Meek. Earlier polls hadn’t made the indie route look very promising for Crist.
In any event, whether he refiles as an indie or just decides not to run at all, today’s veto is going to make him even more of a pariah in Republican circles, and an unlikely hero to teachers.