Posts Tagged ‘ TARP ’

Will the Republican Pledge Backfire?

Friday, September 24th, 2010
Ed Kilgore



Ed Kilgore is a PPI senior fellow, as well as managing editor of The Democratic Strategist, an online forum.

by Ed Kilgore

As the battle for November continued to unfold this week, House Republicans unveiled their long-awaited, long-debated version of the 1994 classic Contract With America.  This one was called the Pledge to America.

In figuring out where to fall between cautious national GOP figures who basically would like to overturn the 2006 and 2008 elections and bring back the splendors of the Bush administration, and the elements of the conservative base, radicalized into the Tea Party Movement, who would like to turn back the clock quite a few decades further, the authors of the Pledge struck an interesting balance.  The Preamble and Forward of the document are full of fiery Tea Party rhetoric suggesting the illegitimacy of the Obama administration and the need for a radical restructuring of the federal government and the immediate abolition of deficits and debt.

But when the Pledge gets into is specifics, it immediately retreats into limited demands for total repeal of the Obama administration’s initiatives, along with a return to Bush tax and economic policies, and notably abandons the fiscal radicalism that so many Republican candidates this year are campaigning on.  There’s no balanced budget promise; no endorsement, even, of a constitutional Balanced Budget Amendment (now, as once before, boilerplate for GOP candidates); and certainly no mention of plans to take on major structural reforms, much less phase-outs, of Social Security and Medicare.

Indeed, the Pledge gives the impression that if the clock could be turned back to August of 2008, before the enactment of TARP, everything would be fine.  It will be most interesting to see how that approach squares with candidates and activists who think a return to 1933 is the only possible solution.

The Pledge does create a sort of whack-a-mole problem for Democrats seeking to exploit it.  Do they focus on the radical rhetoric that suggests a willingness to go after the basic New Deal/Great Society safety net?  Or do they focus on the details that suggest a more modest but equally vulnerable determination to bring back the policies that voters repudiated in 2006 and 2008?

In any event, the very existence of the Pledge offers some hope for Democrats struggling to make the midterm elections something other than a straight-up referendum on the status quo.  Under Republican governance, they will be able to argue, things could get worse, unless you really do pine for the salad days of 2006 or 1933.

The other big political development this week, which is still unfolding, is the decision by Senate Democrats against taking the lead on extending middle-class tax cuts and forcing Republicans to champion the extension of upper-class tax cuts, at least until after November.  There is still a chance the House will move first, but it’s unlikely given vocal Blue Dog opposition, and the decision is being widely derided as evidence of Democratic over-cautiousness, if not surrender, going into the midterms.  It’s an issue that will likely come up, however, in a lame duck congressional session after the elections, though with Republicans, who want to make all the Bush tax cuts permanent, holding a stronger hand.

There’s been some craziness in the polls this week, most notably a Quinnipiac survey showing the very off-the-wall Republican nominee for governor of New York, Carl Paladino, suddenly closing to double-digits against prohibitive Democratic front-runner Andrew Cuomo.   The Q-poll did not exactly reinforce its credibility by then releasing a survey showing another lowly-regarded Republican, Joe DioGuardi, trailing Sen. Kirsten Gillibrand, by just six percent (Siena, meanwhile, had Cuomo up by 33percent and Gillibrand up by 26percent).

Most survey results this week were more conventional.  Mason-Dixon showed Democrat Alex Sink with a 47-40 lead over Republican Rick Scott among likely voters in Florida.  The respected Field Poll, also moving to a likely voter model, showed a dead heat between Jerry Brown and Meg Whitman in the California gubernatorial race.  And a new national Pew poll showed an unusually large 10-point swing in the GOP’s favor between registered voters and likely voters—though interpretations of such results as reflecting an “enthusiasm gap” often ignore the structural reasons for a Republican advantage in midterm elections.

Finally, Google has come up with a very useful series of maps comparing some of the most credible handicappers’ projections of Senate, House, and gubernatorial elections.

Will Conservative Activists Win in Delaware and New Hampshire Primaries?

Tuesday, September 14th, 2010
Ed Kilgore



Ed Kilgore is a PPI senior fellow, as well as managing editor of The Democratic Strategist, an online forum.

by Ed Kilgore

Today marks the last big primary day of the midterm cycle.  Following these eight contests, only Hawaii, this Saturday, and a runoff in Louisiana on October 2, remain on the calendar.

Most of the national attention during the week prior to these primaries has been focused on the two states with competitive Republican Senate primaries, Delaware and New Hampshire.  In both states, late surges by conservative candidates threaten not only to upset establishment-backed front-runners, but also to make these seats far more difficult for Republicans to win in November.

Delaware

The Delaware race has been particularly characterized by late dramatics.  From the day he announced for this contest, congressman Mike Castle has been the prohibitive front-runner, not only for the nomination but for the general election as well.  Castle has won a remarkable twelve statewide elections in Delaware and has never lost.  He has the solid support of both the state and national GOP.  His challenger, religious conservative activist Christine O’Donnell, is a relative newcomer to the state (though she did win the sacrificial-lamb Senate nomination against Joe Biden two years ago) and is mainly known for extremist positions on sexual ethics.  She also has a history of serious personal financial problems, and in fact, has no visible means of support at present.  On top of everything else, she’s run a campaign against Castle heavily laden with homophobic innuendoes about her opponent’s masculinity.

Yet according to the one recent poll, released by PPP late Sunday night, O’Donnell is actually leading Castle 47-44.  She’s received late endorsements from the NRA, Sarah Palin, and Jim DeMint, but only one endorsement, from the Tea Party Express, arrived early enough to give her any kind of material assistance.  She’s benefitting, it appears, from long-simmering conservative resentment of Castle’s voting record: he’s pro-choice; he’s regularly bucked the gun lobby; he voted for TARP; and he was one of a handful of Republican House members who voted for climate change legislation in 2009.  There may be a geographical factor as well; O’Donnell seems to be doing especially well in the southern portions of the state said to be fed up with the domination of Delaware politics by populous New Castle County (Wilmington).

O’Donnell’s late endorsements and particularly the PPP poll seem to have lit a fire underneath the Castle campaign, and his supporters have been pounding O’Donnell very aggressively as voters prepared to make their choice.  One piece of raw material they’ve used is a Weekly Standard article about O’Donnell’s gender discrimination lawsuit against a Delaware-based conservative campus organization.  “O’Donnell’s finances, honesty, and stability have been called into question in light of her false and strange claims,” the article suggests.

If she survives, O’Donnell will be the instant underdog against Democrat Chris Coons, the New Castle County Executive, who’s been running a stronger race than expected against Castle.  But even if Castle pulls it out, the bad feelings from the primary could help Coons make the race competitive.

New Hampshire

Meanwhile, a more conventional if equally close Senate primary is unfolding in New Hampshire, where another originally prohibitive front-runner, Attorney General Kelly Ayotte, is now hanging onto a small lead over “true conservative” activist Ovide Lamontagne, who was the GOP gubernatorial nominee back in 1996.  Ayotte does not have Castle’s kind of voting record to defend, and she’s been endorsed by Sarah Palin and some anti-abortion groups.  But she’s been caught in sort of a pincers movement. During the summer months, a self-funding businessman, Bill Binnie, spent millions attacking Ayotte’s competence and integrity, and lured her into a back-and-forth that boosted both candidates’ negatives.  Just as Binnie (who took the unconventional route of boasting about his pro-choice convictions) began to fade, Lamontagne took flight, particularly at the end of August when he secured the aggressive backing of that hardy conservative monolith, the New Hampshire Union-Leader.  The paper has focused particularly on undermining Ayotte’s conservative support, pounding her daily for agreeing to a financial settlement with Planned Parenthood over a lawsuit against the state’s parental notification law.

PPP’s last poll showed Lamontagne within seven points of Ayotte over the weekend, while another late poll, by Magellan Strategies, pegged her lead at only four points.  Jim DeMint offered Lamontagne a last-minute endorsement, and Sarah Palin’s done some robocalls for Ayotte, but the battle is pretty much between Ayotte and the Union-Leader.  As in Delaware, national party figures are unhappy with the prospects of an upset; Lamotagne is the one Republican candidate who’s trailed Democratic congressman Paul Hodes in general election polls.

Wisconsin

The other statewide contest of note is in Wisconsin, where Milwaukee County Executive Scott Walker is in a heated battle with former congressman (and heavy self-funder) Mark Neumann for the Republican gubernatorial nomination to face Milwaukee Mayor Tom Barrett (D).  This race has mainly revolved around each candidate’s efforts to challenge the conservative credentials of the other, with Walker running last-minute ads attacking Neumann for voting for a large transportation bill in Congress back in 1998.  Walker’s been the front-runner all along, but Neumann’s money has made it competitive.

Washington, DC

DC Democratic voters will determine the fate of Washington Mayor Adrian Fenty, who’s gotten high marks from wonks for his efforts to deal with DC’s dreadful public schools, but has actually been trailing DC Council Chairman Vincent Gray in recent polls.  This contest has exposed long-standing racial rifts; while both candidates are African-American, Fenty’s strongest base of support is among the white gentrifiers whom some African-American voters blame for pricing black folks out of traditional neighborhoods; Gray has also unsurprisingly won backing from those who oppose Fenty’s controversial school reforms.  The outcome will probably depend on turnout patterns in DC’s very diverse electorate.

Photo credit: Kevin Dooley

Brainwashed

Wednesday, February 24th, 2010
Ed Kilgore



Ed Kilgore is a PPI senior fellow, as well as managing editor of The Democratic Strategist, an online forum.

by Ed Kilgore

“Flip-flopping” on major issues can be hazardous to your political health. “Flip-flopping” when you’ve branded yourself as a brave principled “maverick” can be especially dangerous. And “flip-flopping” on grounds that you were confused about the issue in question is really, really bad, particularly when you are on the far side of 70.

That’s why John McCain may have ended his long political career the other day when he responded to attacks by primary challenger J.D. Hayworth on his support for TARP (popularly known from the beginning as the “Wall Street Bailout”) by claiming he was misled by the Fed Chairman and the Treasury Secretary into thinking the bill was about the housing industry, not Wall Street:

In response to criticism from opponents seeking to defeat him in the Aug. 24 Republican primary, the four-term senator says he was misled by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. McCain said the pair assured him that the $700 billion Troubled Asset Relief Program would focus on what was seen as the cause of the financial crisis, the housing meltdown.”Obviously, that didn’t happen,” McCain said in a meeting Thursday with The Republic’s Editorial Board, recounting his decision-making during the critical initial days of the fiscal crisis. “They decided to stabilize the Wall Street institutions, bail out (insurance giant) AIG, bail out Chrysler, bail out General Motors. . . . What they figured was that if they stabilized Wall Street – I guess it was trickle-down economics – that therefore Main Street would be fine.”

What makes this claim especially astonishing is that McCain was rather famously focused on TARP at the time. He suspended his presidential campaign to come crashing back into Washington to attend final negotiations designed to get enough Republican support for TARP to get it passed. He was, by all accounts, a very passive participant in these talks, but it’s not as though he wasn’t there. And you’d think his memories of the event would be reasonably clear, since it probably sealed his electoral defeat.

It’s not obvious how McCain can walk this statement back. And in terms of the political damage he inflicted on himself, it’s hard to think of a suitable analogy without going all the way back to 1967, when Gov. George Romney (father of The Mittster) destroyed his front-running presidential campaign by claiming he had been “brainwashed” by military and diplomatic officials into erroneously supporting the Vietnam War. He never recovered from that one interview line. (Sen. Gene McCarthy, who did run for presidential in 1968, was asked about the Romney “brainwashing” by David Frost, and quipped: “I would have thought a light rinse would have been sufficient.”).

McCain has a more sizable bank of political capital than George Romney ever did, but in a primary contest where he was already in some trouble, the suggestion that he was brainwashed by a Republican administration into fundamentally misunderstanding the central national and global issue of the moment–not to mention the central current grievance of voters with Washington–could be fatal. It doesn’t help that it will vastly reinforce Hayworth’s not-so-subtle claims that McCain is a fine statesman whose time has come and gone, and is now losing it.

This item is cross-posted at The Democratic Strategist.

The World Without Obama

Friday, February 19th, 2010
Ed Kilgore



Ed Kilgore is a PPI senior fellow, as well as managing editor of The Democratic Strategist, an online forum.

by Ed Kilgore

If you’ve been watching the cult TV show “Lost,” then you’re familiar with the concept of parallel universes. That is, alternate realities in which history turned out differently, because people made different decisions.

It’s a useful concept when it comes to thinking about President Obama’s current predicament. On a variety of fronts, the Obama administration is suffering from an inability to show Americans the parallel universe in which its past policies were not enacted — and the future that will result if its current proposals bite the dust.

That’s most obviously true with the early, fateful decisions to continue TARP and bail out the auto companies. They arguably averted the collapse of the global financial system, the virtual extinction of consumer and business credit, and 1930s levels of unemployment (especially hard-hit would have been the upper Midwest). Nevertheless, no matter how often the president tells us his actions kept a deep recession from developing into a Great Depression, it remains an abstract proposition for the people who are currently unemployed. The same is true for the 2009 economic stimulus package, which virtually all experts, public and private, credit with saving about two million jobs. The continued job losses reported each month make it hard to claim that one has succeeded by avoiding even greater unemployment.

The problem of “proving a negative” is even more daunting when it comes to prospective policy proposals. Critics savage Obama for a health care plan that doesn’t do enough to limit costs. Obama responds that health care costs are going up anyway, without a plan. But it’s not easy to convince people that the status quo is riskier than a large and complicated series of changes in how Americans obtain health insurance. That’s why the White House has made such a big deal out of Anthem Blue Cross’s gargantuan premium increases for individual policyholders in California. It is, they argue, a sign of where the status quo is headed absent reform. They do not, unfortunately, have such a convenient example that will help them explain the need for climate-change legislation, as conservatives, stupidly but effectively, cite this winter’s heavy snowstorms as disproof for the scientific consensus about global warming trends.

There is one way to deal with Obama’s dilemma. Although it’s difficult to prove that American life under the president’s policies is better than life without them, it should be easier to point to another parallel universe: life under Republican policies. But such an effort requires a basic strategic decision. Should Democrats point back to the reality of life under George W. Bush, which most people remember pretty vividly, and simply say today’s GOP wants to “turn the clock back”? Or should they focus on current Republican proposals, such as they are, which in many respects make Bush policies look pretty responsible? It’s hard to take both tacks simultaneously, since the extremism of contemporary Republican politics is in no small part motivated by a determination to separate the GOP and the conservative movement from association with that incompetent big spender, Bush, who failed because he “betrayed conservative principles.”

It appears the White House is increasingly inclined to take the second, forward-looking approach to highlighting the GOP’s desired alternate reality, rather than the first, backward-looking one. As much as some Democrats wail about the “bipartisanship” rhetoric that surrounds Obama’s outreach to Republicans, which he’s employed while challenging them to direct debate over health reform and economic recovery, the president’s main intention is clear. He wants to force the opposition to help him present voters with a choice between two specific courses of action — or simply admit that their strategy is one of pure gridlock, obstruction, and paralysis (which, as my colleage J.P. Green has pointed out, spells “G.O.P”).

The stake that Obama and the Democrats have in convincing Americans to consider these parallel universes couldn’t be much higher. This November, if voters remain fixated on the current reality, rather than the terrible alternatives, then the midterm elections really will be a referendum on the status quo and its Democratic caretakers. Explaining life as it would be without Obama, and as it could be under Republican management, is not easy. But Democrats must do it or face catastrophe at the polls.

This item is cross-posted at The Democratic Strategist.

One Step Forward, One Step Back

Friday, January 22nd, 2010
Mike Derham



Mike Derham is chair of PPI's Innovative Economy Project.

by Mike Derham

The White House yesterday announced new restrictions on banking activity, designed to address the issues that caused the crisis 15 months ago. Wall Street reacted by letting stocks fall 200 points, which initially would make you think the announcement must be right. The White House’s plan has two main parts: a limit on the scope of banking activity and a limit on the size of banks. One part makes sense, but as presented, the other should be re-thought.

Limit on Size – The good part is the limitation on the size of banks. This will include a tighter cap on the control of deposits. Currently no bank can control more than 10 percent of the nations deposits — but Bank of America got the Bush administration to waive that in 2007 to buy LaSalle. The administration’s proposal would have this cap include non-insured assets and other deposits. While this is a good first step, its effectiveness will be spelled out in the details. Bank of America is the only bank that exceeds the current cap, and almost 25 institutions could be considered “Too Big To Fail.”

Limit on Scope – At first blush, this seems to be a ban on banks taking FDIC-insured deposits – or having received TARP money – from engaging in proprietary trading. Prop trading is a major part of Wall Street activity, in which investment banks trade with “their own money.” That is, they engage in trading on their own behalf, not on the behalf of customers. The administration is right that a lot of this trading on prop desks is speculation. However, prop trading is also how investment banks and market makers engage in risk management and hedge positions. Banning prop trading by banks would severely curtail their market-making ability, and dry up liquidity on Wall Street faster than a sponge in the sun. Better than limiting the type of activity trading desks engage in would be to limit the amount of leverage they can use in that speculation.

The administration has said it is going to work with Congressional leaders in the coming weeks to spell this out in details. We’ll see if Congress is able to improve on these suggestions.

Left-Right Convergence?

Wednesday, December 16th, 2009
Ed Kilgore



Ed Kilgore is a PPI senior fellow, as well as managing editor of The Democratic Strategist, an online forum.

by Ed Kilgore

The latest intra-progressive dustup over health care reform displays a couple of pretty important potential fault lines within the American center-left. One has to do with political strategy, and the role of the Democratic Party and the presidency in promoting progressive policy goals and social movements. I’ll be writing about that subject extensively in the coming days.

But the other potential fault line is ideological, and is sometimes hard to discern because it extends across a variety of issues. To put it simply, and perhaps over-simply, on a variety of fronts (most notably financial restructuring and health care reform, but arguably on climate change as well), the Obama administration has chosen the strategy of deploying regulated and subsidized private sector entities to achieve progressive policy results. This approach was a hallmark of the so-called Clintonian, “New Democrat” movement, and the broader international movement sometimes referred to as “the Third Way,” which often defended the use of private means for public ends. (It’s also arguably central to the American liberal tradition going back to Woodrow Wilson, and is even evident in parts of the New Deal and Great Society initiatives alongside elements of the “social democratic” tradition, which is characterized by support for publicly operated programs in key areas.)

To be clear, this is not the same as the conservative “privatization” strategy, which simply devolves public responsibilities to private entities without much in the way of regulation. In education policy, to cite one example, New Democrats (and the Obama administration) have championed charter public schools, which are highly regulated but privately operated schools that receive public funds in exchange for successful performance of publicly-defined tasks. Conservatives have typically called for private-school vouchers, which simply shift public funds to private schools more or less unconditionally, on the theory that they know best how to educate children.

Now clear as this distinction seems to “New Democrats,” there are a considerable number of progressives who think it’s largely a distinction without a difference, in education policy and elsewhere. And we are seeing that fundamental divergence on opinion on other, more prominent issues right now. On the financial front, the Obama administration reflexively pursued a strategy of regulation and subsidies for the financial sector, without modifying the fundamental nature of financial institutions, even as critics on the left argued for nationalization (at least temporarily) of key financial functions. At the more popular level, critics of TARP from the left joined critics of TARP from the right in deploring “bailouts” of failed financial institutions, even though the two groups of critics held vastly different views of the right alternative course of action.

Similarly in the health care reform debate, the Obama administration pursued legislation that utilized regulated and subsidized private for-profit health insurers to achieve universal health coverage. This approach was inherently flawed to “single-payer” advocates on the left, who strongly believe that private for-profit health insurers are the main problem in the U.S. health care system. The difference was for a long time papered over by the cleverly devised “public option,” which was acceptable to many New Democrat types as a way of ensuring robust competition among private insurers, and which became crucial to single-payer advocates who viewed it as a way to gradually introduce a superior, publicly-operated form of health insurance to those not covered by existing public programs like Medicare and Medicaid. (That’s why the effort to substitute a Medicare buy-in for the public option, which Joe Lieberman killed this week, received such a strong positive response from many progressives whose ultimate goal is an expansion of Medicare-style coverage to all Americans).

Now that the public option compromise is apparently no longer on the table, and there’s no Medicare buy-in to offer single-payer advocates an alternative path to the kind of system they favor, it’s hardly surprising that some progressives have gone into open opposition, and are using the kind of outraged and categorical language deployed by Marcy Wheeler yesterday. As with the financial issue, there’s now a tactical alliance between conservative critics of “ObamaCare,” who view the regulation and subsidization of private health insurers as “socialism,” and progressive critics of the legislation who view the same features as representing “neo-feudalism.”

To put it more bluntly, on a widening range of issues, Obama’s critics to the right say he’s engineering a government takeover of the private sector, while his critics to the left accuse him of promoting a corporate takeover of the public sector. They can’t both be right, of course, and these critics would take the country in completely different directions if given a chance. But the tactical convergence is there if they choose to pursue it.

For those of us whose primary interest is progressive unity and political success for the Democratic Party, it’s very tempting to downplay or even ignore this potential fault-line and the left-right convergence it makes possible. It’s also easy to dismiss critics-from-the-left of Obama as people primarily interested in long-range movement-building rather than short-term political success; that’s true for some of them. But sorting out these differences in ideology and perspective is, in my opinion, essential to the progressive political project. And with a rejuvenated and increasingly radical right’s hounds baying and sniffing at the doors of the Capitol, we don’t have the time or energy to spare in dialogues of the deaf wherein we call each other names while getting ready for the elections of 2010 and 2012.

This item is cross-posted at The Democratic Strategist.

A Game Plan for Infrastructure

Thursday, December 10th, 2009
Mike Derham



Mike Derham is chair of PPI's Innovative Economy Project.

by Mike Derham

A Game Plan for InfrastructureIt’s a sign of the times when “our bridges and roads are falling apart” gets cited as an issue more pressing than college football’s annoying Bowl Championship Series (BCS) on ESPN.

And, while the president hasn’t fulfilled his promise to set up an eight-team playoff yet, he’s taken the issue of infrastructure head-on. The administration’s focus on infrastructure investment is good for both long-term growth and generating jobs through the quick start-up of “shovel ready” projects.

However, one-time disbursements like those outlined in the Recovery Act or the president’s announcement earlier this week fall short of fixing more fundamental issues.

On the heels of Obama’s speech at Brookings on Tuesday, Rep. Keith Ellison (D-MN) is at the same venue today pushing a much more sustainable approach.

Ellison is a co-sponsor on Rep. Rosa DeLauro’s (D-CT) National Infrastructure Development Bank Act, a good start on developing sustainable infrastructure funding the country so desperately needs.

DeLauro and and Ellison’s bill builds on the work of a bipartisan commission chaired by former Sen. Warren Rudman (R-NH) and titan of finance Felix Rohatyn. The bill envisions $5 billion a year from the federal government to capitalize the bank and a government debt guarantee of up to $50 billion.

But even Ellison and DeLauro’s idea can be improved upon. As outlined in Jessica Milano’s PPI policy memo, “Building our 21st Century Infrastructure,” an American Infrastructure Bank (AIB) seeded with a one-time investment at the federal level — a potential use for the TARP funds the president announced this week — and stakeholder buy-ins from the states would be a more effective way to fund a bank dedicated to financing infrastructure programs.

An infrastructure bank would offer a way to leverage much larger private sector investments from a strapped public budget. The bank would raise inexpensive funding for infrastructure projects by issuing debt on the capital markets backed by the U.S. government’s credit rating. By backing these bonds with the revenue or assets of the projects they are financing, taxpayers would not be left to pick up the bill. These projects would be determined according to strict criteria that promote economic development while being fiscally and environmentally sound.

After the President’s remarks on Tuesday, Gov. Ed Rendell of Pennsylvania — an infrastructure bank supporter — said the president had “essentially” endorsed the idea of an AIB. But while the president sounded open to the idea this week, he hasn’t gotten behind the legislation needed to get it done. President Obama endorsed an infrastructure bank back when he was candidate Obama. But, much like his promise of reforming the BCS, this threatens to become another campaign promise that falls by the wayside. Now’s the moment for the president to come off the sidelines and lead a sustained drive down the field.