Republicans Fighting To Increase Deficit

[ Posted Tuesday, June 29th, 2010 – 22:03 UTC ]

The Wall Street reform bill, now christened Dodd-Frank, is entering its final stretch this week. The House/Senate conference committee is finishing up work on the bill, and the goal is to get it through both houses of Congress and on the president's desk by July Fourth. A quick look at a calendar shows that this is a very tight schedule. To complicate matters, the death of Senator Robert Byrd now means the Democrats are short a vote they had been counting on. Which means they need some Republicans to vote with them, or the bill won't survive the inevitable filibuster attempt.

In the midst of this high-pressure environment, the Republicans which Democrats have been courting suddenly took umbrage at a provision in the bill -- because they want taxpayers to bear the cost, instead of Wall Street. Yes, you heard that right. After making mountains of political hay out of the "bailouts," Republicans are demanding that any future "bailouts" are paid for by taxpayers, instead of the banks themselves.

Leading this charge is Senator Scott Brown from Massachusetts. Brown has already gotten a "Bay State Bribe" inserted in the bill, which will allow some companies (coincidentally, some of which are located in Massachusetts) to be exempt from the Volcker rule, and also allow banks to continue making risky bets (Democrats wanted to sever the practice altogether, but Brown forced them to allow companies to gamble with up to three percent of their money). Back when the subject was healthcare reform, Republicans got into some awfully high dudgeon about this sort of legislative deal-making, but when it's one of their own, they are mighty silent on the issue, you'll notice.

Bay State Bribe aside, though, Brown's next move was to demand the rewriting of the bill so that the biggest Wall Street institutions wouldn't have to pay into a twenty billion dollar fund which is being set up much like F.D.I.C. -- as insurance against the failure of an institution. Rather than a TARP-style "bailout," this fund would only kick into action when an institution failed and was dismantled by the regulators -- the same as the F.D.I.C. does when a traditional bank fails, to protect the depositors, and avoid "runs" on banks. It was to be paid for by a fee on the biggest Wall Street institutions. Brown didn't like this, and called it a "tax." And he pulled his support for the overall bill, derailing its chances of passage.

But without the big bank fee, the Democrats have been forced to rewrite the bill so that the money will come from fees on smaller banks (who, it should be pointed out, did not cause the financial meltdown) and from leftover TARP funds. The problem with this is that the banks who did cause the meltdown are not going to have to pay to prevent future meltdowns. Instead, smaller banks will, and so will the American taxpayer (who paid for TARP in the first place).

This runs so counter to the argument Republicans have been making over the budget and the deficit that it defies comprehension. Republicans have been saying (and voting) for months now to make sure all bills are "deficit-neutral," or paid for. Dodd-Frank was paid for. It was deficit-neutral. Now it will not be. Now, at the insistence of a Republican, it will be paid for in part through TARP funds that would otherwise be spent paying down the deficit. In other words, Scott Brown is holding the bill hostage until it adds to the deficit -- because he didn't like the fact that it was deficit-neutral.

This is hypocrisy at its purest. In fact, it even surpasses hypocrisy and ventures into the dramatic, leading me to close with: "Irony, thy name is Republican."


-- Chris Weigant

Follow Chris on Twitter: @ChrisWeigant


8 Comments on “Republicans Fighting To Increase Deficit”

  1. [1] 
    akadjian wrote:

    To be fair, Chris, and I completely agree w/ your commentary and the irony of Scott Brown's statements, I think the real issue is bigger than Scott Brown.

    Why? Because all I think the Democrats would have to do to not allow this to happen is to come out and say almost exactly like what you said.

    Something like this:

    "Scott Brown is asking for you, the taxpayer, to pick up the bill for future bailouts. This is wrong. The big banks who caused this crisis should be paying."

    This seems like all it would take to get a junior Senator from Massachusetts to back down. Or am I missing something here?

    Yet they don't. A junior Senator. Instead they're negotiating with him. Unless again, I'm missing something here.

    Sadly, we see this again and again until you either have to conclude that Democrats are a) incompetent or, b) they actually want this as well and just don't want to go on the record saying it.

    I would actually like to believe they are incompetent because that could be addressed, but this just doesn't ring true. The script repeats too often.

    I believe that what has happened is that the two parties are both beholden to large corporate interests such as the financial sector and work together in this scripted fashion to pass legislation that won't really change things too much.

    This is what I find frustrating. Partly because I don't see the Republican party or Tea Party as a viable alternative.

    This is why I contribute only to individual candidates and groups who are fighting to do the right thing, and not the Democratic party.

    What's needed is much more reform within the Democratic party and a way to convince them that they don't need corporate backing in order to win.

    Rant over.

  2. [2] 
    akadjian wrote:

    p.s. This is one of my new favorite sites for donations to help elect better Democrats:

  3. [3] 
    Chris Weigant wrote:

    David -

    I personally think its a problem of "message discipline" on the Democrats' part. Whenever a Democrat does something Republicans don't like, you can be sure they'll be decrying it to the high heavens for the next week solid. They keep on message, all of them are on the same page, and they get their point across no matter what question a journalist asks them. Democrats, for some reason, seem fundamentally incapable of doing the same thing.

    The Wall Street reform bill is just the latest example, and the most frustrating currently. Here is an issue tailor-made for this year's campaign: "Republicans are standing up for Wall Street, Democrats are standing up for Main Street!" -- this should be the centerpiece of the Democrats' entire campaign effort, and yet (as you point out) so far, they're fumbling it once again.



  4. [4] 
    akadjian wrote:

    The "on message" point is a good one. Though it seems they've gotten a lot better at this.

    I'm also not intimately familiar with Senate procedure, but I'm guessing that the death of Senator Byrd probably happened at a really bad time.

    It sounds like they had the votes lined up and then, with Byrd's passing, suddenly someone like Brown realized he had more leverage.

    I still believe if Dems did this right, though, much of this could be avoided or at least prepared for.

    That is, they need to get their philosophy out in front of the legislation. Get out what they stand for first. With the story and overarching narrative in place and with buy-in for a middle-class narrative, it'd make it much easier to hammer someone like Brown.

    And at some point, be prepared to call a bluff. This would have been a good time to do it. Imagine Scott Brown actually following through on a filibuster for his "special treatment". I don't see it.


    p.s. I also see their Wall St vs. Main St message as causing them some unique struggles. It's a powerful message, but in particular, I think it can be viewed as anti-business and this is how Republicans will portray them. This is more a messaging issue than an actual philosophy issue.

  5. [5] 
    Michale wrote:

    The problem here is that ya'alls perception of the Democrats' actions is fundementally flawed..

    You seem to think that Dems are going against Wall St and standing up for Main St.

    You are in error.

    Everything that Dems have done to date has grossly benefited Wall St.

    Even the current Wall St (so called) regulation is a big boon for Wall St and the banks..

    Why else would all their stocks shoot up?

    Now I am not saying that the GOP is the champions of Main St..

    But the facts clearly show that they are considered more so than the Democrats are..


  6. [6] 
    Chris Weigant wrote:

    Michale -

    Then how do you explain this?

    If the Dems really are fighting for Wall St, why is WS mad at them and not donating as much?



  7. [7] 
    Michale wrote:


    More than 600 regular donors from the New York area -- whose four- and five-figure checks added up to $10 million for the DSCC and DCCC in 2006 and 2008 -- have so far abandoned their effort to retain the Democratic majorities.

    My guess is that it's more that the major donors don't want to back the losing team, rather than it being a collective punishment for bad legislation..

    Of course, the DSCC tried to spin it the other way, but what's the more likely explanation?? :D

    Reality is more likely that WS sees the writing on the walls and are going to put their money over to the GOP instead of the DP..

    Time will tell.. :D

    But here's the thing..

    *IF* Obama et al was REALLY behind Main St, then they would give us jobs??

    Main St cried for Jobs...

    Obama gave us TARP

    Main St yelled for Jobs...

    Obama gave us Crap Care

    Main St SCREAMED for Jobs...

    Obama gives us financial "reform"

    What part of....

    J..... O...... B..... S.......

    .... does the Obama Administration NOT understand??

    And please, please do not give me that song and dance about how many magical mystical jobs the bailouts saved or created..

    We are BOTH too intelligent to buy into THAT load of felgercarb... :D

    Let's face it...

    Obama and the Democrats are as much behind Main St as the Republicans are and probably a lot less...


  8. [8] 
    Michale wrote:

    Confirmation of what I just posted above... :D

    "You can't win! I've got God on my side!!"
    -Max Von Sydow, NEEDFUL THINGS



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