It looks like Scott Brown for certain, and possibly Collins and Snowe, are worried about a $20 billion dollar fee that the financial reform bill would add, and are now going to not vote for the bill.
First off, as Ryan Avent notes, this shows how completely not serious Republicans are about the deficit:
The fee in question was introduced during the conference session and is designed to cover the cost of the bill, that is, to make sure it’s deficit neutral. It’s a modest amount, and it’s levied on entities that have benefitted significantly from the massive government intervention deployed to keep the financial system afloat during the financial crisis.
And yet the most moderate Republicans in the Senate are balking at the charge. Not because they disagree in any real sense with the economics of the fee. They simply won’t vote for anything that looks like a tax.
This is why it’s so difficult to imagine a solution to America’s long-run budget crisis.
TARP is still running a loss, and there’s a mandate to recover it. A slight penalty is perfect to make sure firms don’t want to become systemically risky unless there is value added. If there is an externality to a banking crisis a slight tax on, ideally, non-deposit liabilities to discourage their use in favor of more “sticky” funding sources is ideal for funding the government and nudging against a liquidity crisis.
Also as Dave Dayen points out:
If this isn’t a Lucy-with-the-football moment, I don’t know what is.
Brian Beutler reports that Hill aides told him President Obama’s Treasury Department sided with Scott Brown in the waning moments of the Wall Street reform conference committee, favoring his loophole for the Volcker rule designed to help asset management companies in Massachusetts. In the process they shot a giant hole through the efforts to stop the mega-banks from investing in private equity or hedge funds, allowing them to use up to 3% of Tier One Capital…So the White House put all their eggs in the Scott Brown basket to ensure passage, and now he’s wavering.
I pointed out this playbook before in financial reform when it comes to the auto lending exemption:
Here’s my real problem, and it’s a serious one. Campbell asked for an auto loan exemption to be put into the CFPA, moving it into the direction of a crony corporate welfare bill. He then voted against the final bill. He also voted for a last minute amendment – the “Idaho Amendment”, which came very close to passing – that would have killed the original CFPA in the bill and replace it with a significantly weaker version.
Follow this pattern, but in slow motion. It shows up in health care, the stimulus and everywhere else in 2009, but with financial reform it is very easy to see. Democrats wants a bipartisan financial reform bill. So they take a good CFPA and water it down and give all kinds of crony exemptions so Republicans like John Campbell will support it. Then Republicans vote against it anyway. The Republicans then hire Frank Luntz to come up with language about how the CFPA is a bad idea because Elizabeth Warren and Obama are in the pocket of auto lenders and are engaging in crony capitalism, and how heroic people like John Campbell stood up and voted their conscience.
As a machine, it’s amazing. If this GOP good-policy-killing-and-deception machine was a car it would get like 100 miles to the gallon. It’s a terrible thing to do, to score cheap political points at a moment when the country desperately needs to get its arms around financial reform, but man is it efficient. And it’s working every time.
Is it a good idea to trade auto exemption for a Republican vote? Honestly I have no idea, I’m not a politician and I can’t follow all the horse trading going on with those kinds of things. But if you are going to trade a crony favor for a Republican vote, you should actually get the vote! Call me old-fashioned.
I bet the next favor the Democrats trade will be the one that really gets the vote! Meanwhile, they completely ignored trying to meet Cantwell’s reasonable concerns about the loopholes, or even try to engage Feingold halfway. Instead of trying to please a progressive Democrat they tried to please a centrist, moderate Republican. That’s like trying to please a dinosaur – you are trying to please something that went extinct quite some time ago. You are actually trying to please a Republican who, at a core level, really wants you to fail for messaging purposes in the upcoming election. Good luck with that.