The politics, the politics. The day dawns and the fog clears across the field of conflict. The dead are carried off, the wounded tended, and the Republicans are partying hardy. How long will the party last? At the risk of sounding glib, or repeating the conventional wisdom, there's now embedded in the Republican ranks a profound incoherence, while Democrats, having absorbed a significant swath of losses running across the Midwest like a knife wound, find themselves weaker if more unified. Generally, progressives survived while Blue Dogs got routed. As for the Republicans, how will they reconcile deficit reduction, tax cuts and job growth? How will they balance a populist disdain for bank bailouts with a traditional embrace of Wall Street and banking? How will they balance off populist anger at free trade and immigration with the traditional GOP care and feeding of multinationals?
Consider one set of complex issues: financial reform in the guise of Dodd-Frank. First, it's questionable whether even a united Republican front can reform the reform package, or even whittle away at it at this point. Dodd-Frank has already handed off most of the actual work on systemic issues to the regulators. Why would Republicans want to wade into that morass? Besides, the Senate remains Democratic, and Obama has the veto. Second, what would the Republicans unite around? There are essentially two ways to go. Attempt to unshackle the banks by reducing taxes, gutting the consumer agency and trying to water down legislation, say, on derivatives or proprietary trading. But that would run against the populism of the Tea Party rump, which is agitated by the very idea of bailouts and, on the libertarian wing, by the thought of any kind of federal intervention. The fact is, despite bank complaints, Dodd-Frank is generally moderate legislation in the first place. And the largest complaint about it, emanating from the left, is that the banks need to be broken up. Well, that's not likely.
The big underlying question looks certain to remain underlying: the size and speculative content of finance. Again, incoherence will probably weaken any initiative coming out of Congress. Speculation after all is a pure form of entrepreneurialism; don't tread on me! And more mainline Republicans, eager for campaign funds and open to arguments for free-trade and efficiency-driven growth, are unlikely to rush ahead and start hacking away at the banks. Despite his recent populist leaning, would you expect John McCain to embrace a tougher Volcker Rule?
What will be fascinating are the quixotic campaigns that begin to emerge. It's been decades since the heyday of hard-bitten, New Deal populists like Democratic Rep. Wright Patman of Texas, who harassed the banking industry and the Federal Reserve from his seat on the House banking committee. Now we might get to see a revival of the let's-put-the-evil-Federal-Reserve-out-of-business campaigns, potentially led by new Kentucky Sen. Rand Paul. Right now, such a campaign looks unlikely to gain traction, but it would be entertaining nonetheless. Paul, however, might ponder the career of Patman who traced a trajectory from populist idealist to economic crank while serving in Congress. Patman seemed like a crank only because he remained rooted in a '30s regulatory mindset while the Zeitgeist changed around him. In politics, the maverick thing can get old very fast.
Robert Teitelman is editor in chief of The Deal.