As the Senate turns its attention to restructuring regulations for Wall Street, Democrats who demand strong and comprehensive reform are concerned that they may have already lost the messaging wars.
Last week, when Senate Banking Committee Chairman Chris Dodd (D-Conn.) announced that he was essentially giving up hope for Republican cooperation in crafting regulatory reform, citing a deep "impasse" with ranking member Richard Shelby (R-Ala.), the political barely registered surprise.
For weeks, if not months, it's grown increasingly clear that Republicans have been unwilling to jump on board a reform package that involves more regulatory oversight. Not a single Republican in the House voted for that chamber's legislation. A massive lobbying effort by the banks combined with the election of Scott Brown (R-Mass.) to the Senate -- depriving Democrats of the potential 60th vote needed to break a parliamentary logjam -- made matters even worse. But at a time when the situation is growing more dire, Democratic party officials are worried that there is not enough momentum to generate a compelling campaign to pass regulatory reform.
"Everyone has been so focused on health care that few have focused on financial reform," acknowledged Stan Greenberg, a prominent Democratic pollster.
"I share the concerns [about the bill being poorly defined]," Sen. Sherrod Brown (D-Ohio) told the Huffington Post in an interview last week. "I think that we've got to figure a way... I don't know if the Republicans will ever vote for a good bill. I think that [Senate Minority Leader Mitch] McConnell wants Republicans in the [Banking] Committee to stop anything from happening unless it's what the banks want. And I come down on wanting to force them, put a good bill on the floor and force them to vote yes or no, whether they can wean themselves from their corporate backers or not."
These concerns peaked roughly two weeks ago with the release of conservative messaging guru Frank Luntz's memo aimed at defeating prospective legislation. The document's conclusions weren't particularly original -- when framed as a boondoggle for the banks, a gift-bag for special interests and a massive overreach by government bureaucrats, regulatory reform is unpopular. But what scared some was how swiftly Luntz's framing has already sifted into the debate -- with a television ad by the conservative group Committee for Truth in Politics incorporating several prominent talking points.
Considering the role Luntz played in helping derail health care legislation over the summer, several Democratic strategists openly wonder whether the party is in for a repeat performance on the regulatory reform front this winter and spring. Already, it's been reported that Dodd is considering dropping one of the chief components of reform -- an independent consumer protection agency -- in hopes of getting GOP support, a move vaguely reminiscent of what happened to the public option for insurance coverage. His office denied that story. On Thursday, however, the Connecticut Democrat announced he would try again to get Republican support for his bill, this time targeting Sen. Bob Corker (R-Tenn.).
"We clearly didn't win the messaging war on health care," said one Democratic Senate aide. "And I think there are some folks up here who are worried it's gonna happen again."
But the parallels aren't precise, say regulatory reform proponents. For several significant reasons, the challenges facing Democrats when it comes to regulating Wall Street should be less daunting. Unlike the idea of expanding health care coverage to the uninsured, the concept of preventing another economic catastrophe is something that every voter with a bank account or retirement savings can understand. Moreover, it should be easier for Democrats to depict Republicans as the pawns of the big banks than it was to cast the GOP as beholden to private insurers for derailing health care legislation.
"The financial crisis affected everyone negatively and they see it in their personal life and in the economy overall," said Heath Booth, director of Americans for Financial Reform, an umbrella lobby for a coalition of groups pushing strong regulatory oversight. "That is where the American public is. Whether the political leadership, who are raising a great deal of money from the biggest banks and the other financial interests... can have an influence on the debate is the question. We think the American public is smarter than that and can see these dishonest tactics for what they are."
"The debate comes down to either votes or money," Booth concluded. "It is either people power or the greatest wealth of the biggest banks and there really is a dividing line now. We are now asking: which side are you on?"
Clearly, financial reform proponents have the manpower to help turn the tide of the debate. Operating under Booth's group, the country's largest unions are all poised to put substantial resources behind the legislative fight. Already, they and others have tackled Luntz's messaging head on, either in the form of official statements, opinion pieces or messaging memos of their own.
But some of the most outspoken voices within the Democratic Party are worried that boilerplate talking points and on-camera posturing won't be enough. Activists, they insist, are going to have to get their hands dirty and make it clear upfront that compromise for the sake of bipartisanship is not a virtue -- even if it means ticking off the Obama White House.
"To have any hope of shackling the banks, as needed if the economy is to work," said Robert Borosage, co-founder of the liberal leaning Campaign For America's Future, a multi-prong strategy is needed. The first part is to unearth revelations of excess, greed and fraud by financial institutions. The second is to track the role that lobbyists (both Democrats and Republicans) have played in influencing lawmakers and party committees. The third is to make sure that politicians understand how heavy this issue will weigh in the 2010 elections.
"We've got to make these folks the skunks of the crash, and the pariahs at the congressional banquet," said Borosage. "And that means a lot more independence from the administration than with health care. Administration [regulatory] reform proposals were inadequate to begin with, and its rescue plan left banks more concentrated and even less regulated, with the explicit promise that we cover their bets. So the reform movement has to go after the administration, as well as Congress [and] as well as the money."
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