Friday, December 12, 2014


I know Democratic Senator Elizabeth Warren's hair is on fire about the year-end spending bill passed yesterday (December 11, 2014) by the House of Representatives, and so is Nancy Pelosi's. A lot of other Democrats are also in flames. Many of my fellow liberals are directing their ire at President Obama because he pressured House Democrats to vote for the bill, which funds the government through September, 2015. (Fifty-seven Democrats did vote for the bill; without their votes, it would have failed.)

My liberal friends are most angry about the rider in the spending bill that weakens the Dodd-Frank legislation of 2010. Among other things, the Dodd-Frank law was designed to prevent banks from using depositors' federally insured savings to gamble on swaps and other derivatives; without Dodd-Frank, if those gambles go wrong, the taxpayers would have to bail out the banks . . . again. My fellow liberals, furious about the amount of money in politics already, are also burning hot about a provision that raises limits on what individuals can give to political parties.

Elizabeth Warren is mighty angry.
The rantings of Warren, Pelosi, and others aside, here are some facts to keep in mind about all this, so we at least know what we're outraged about:

1) Obama did not ask for the weakening of Dodd-Frank regulations to be put in the spending bill. By all accounts, he did not want that provision in the bill. His asking members of Congress to support the bill as a whole in no way represents his endorsement of that one provision.

2) In 2013 a bill came up calling for this exact change in Dodd-Frank regulations—a change allowing some bank credit swaps and other derivatives to be covered by federal insurance. When that bill came up in 2013, 70 Democrats voted for it. It had in fact been co-sponsored by a Democrat. In other words, when it comes to this provision in the spending bill, Obama's own party is split, despite the publicity being given to the disgust of Nancy Pelosi and Elizabeth Warren.

Obama and Pelosi in warmer times.
3) The insured-derivatives provision in the current spending bill affects less than 10% of the banks' swaps/derivatives transactions.

4) About 50% of the Dodd-Frank rules have not even been written out yet, even though the bill was passed four years ago. House Republicans have managed to de-fund, obfuscate, or delay the implementation of most of the law up to this point, anyway. There is some question about whether the change in the current spending bill makes any difference at all, given that the law is full of so many loopholes already and that none of its strongest and most important provisions are even being enforced four years later. (Note: This failure to enforce Dodd-Frank is not the executive branch's or Obama's fault. The Republicans in the House have refused to fund enforcement or clarify the rules, so they cannot yet be enforced.)

5) According to insider reports, the Dodd-Frank-weakening provision came as a compromise necessary to protect the Consumer Protection Bureau from further Republican depredations. The Dems were given a choice: a slight weakening of one aspect of Dodd-Frank (which is already a mess) or a frontal attack on the Consumer Protection Bureau (which is the one part of the Dodd-Frank legislation that is in fact doing good work).

6) If the spending bill had been voted down, the government almost certainly would have been shut down. This would have been very bad in every way for an economy that is otherwise doing quite well these days, and the shutdown would almost certainly have been blamed on the Democrats and Obama (had he threatened a veto).

Will the current spending bill really change campaign financing?

7) The provision in the bill that allows individuals to give "10 times the current amount" (as most news reports put it) to political parties has not been clearly explained in most media. The provision allows individuals to give that extra money only to committees of the political parties that 1) put on conventions, 2) deal with recounts, and 3) control building expenses. The money would not go to those committees that distribute money to candidates. The new provision would in no way increase the amount of money given directly to candidates by any individual, which is still limited to $2,600 per election. Several nonpartisan campaign-finance experts have suggested that raising the amount given to political parties is in fact necessary so that the political parties themselves can counter, at least to some extent, the influence of political PACs. As a recent article in The Daily Kos about the Koch brothers having their own "political party" suggests, if PACs get any stronger, the political parties themselves will grow relatively weaker, and perhaps irrelevant, by comparison. That would not necessarily be a good thing, for reasons I'm sure that anyone reading this understands.

These facts in no way lessen my outrage about the riders added to the spending bill. I too am furious at any attempt to weaken Dodd-Frank, even if Dodd-Frank's enforcement is several years down the road (if it will ever be enforced). I am also furious that the bill cuts $345 million from the Internal Revenue Service's budget, making it more difficult to go after rich tax cheats, and that it cuts $60 million from the Environmental Protection Agency's budget, making it more difficult to combat poisoned air and the overheating of the planet. To be honest, I'm not too concerned about people being allowed to help the political parties pay for their conventions and rest rooms.

If one looks at all the facts, one can see why Obama agreed to a bill that keeps the government running for another year rather than see the government shut down: such a shutdown would have damaged his party and, more importantly, the country.

I am glad all this gives the Elizabeth Warrens of the Democratic Party a chance to have their ideas heard (I like her ideas), but Elizabeth Warren and President Obama have very different responsibilities just now, a fact that some of my fellow liberals don't seem to take into account.

Has Obama really betrayed Chris Dodd and Barney Frank, as some liberals claim?

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