By Robert Schlesinger, Thomas Jefferson Street blog
The political dynamics of financial reform, which the Senate could start considering as early as this week, are interesting for the starkly different ways the two parties appear to be reading the issue. Each side seems to think they can score big political points here. What it looks like it will come down to is how this bill gets defined. Republicans want to call it a "bailout" bill, while Democrats are training their fire on Wall Street.
At issue is a $50 billion "Orderly Resolution Fund" the bill would set up with money from banks. When a bank gets into trouble, regulators would, as the Washington Independent's Annie Lowrey explains, "fire every member of management, wipe out shareholders, split the company up, and sell the pieces." The money from the fund would be used to pay for the winding down process (Virginia Democratic Sen. Mark Warner has called it a "death panel").
So it's not a bailout in the commonly accepted sense--taxpayer funds used to save a company; instead it's bank funds used to bury a company. But as an old friend of mine likes to say, why worry about the facts when there's a good story in our midst?
For Republicans that story is that the $50 billion pool of money is a "bailout fund." Frank Luntz, the GOP's preeminent word doctor, produced a memo in January that laid out this line of attack. "Public outrage about the bailout of banks and Wall Street is a simmering time bomb," Luntz wrote, adding that, "the single best way to kill any legislation is to link it to the Big Bank Bailout." Sound familiar?
This is not to suggest that Democrats have been any less careful about crafting their talking points. They too have been briefed on the proper language to use. And while the specific advice doesn't appear to have been made public yet, a Gallup poll released today can give us a fair idea of the linguistic fault lines. Gallup found that statistically insignificant majority (46-43 with a 4 point margin of error) favored Congress passing a law to "regulate large banks and major financial institutions," but favor by a wide margin (50-36) the idea of Congress legislating to regulate "Wall Street banks." Similarly a recent Pew poll found that while a majority of Americans (51-40) oppose more government control over the economy, an even larger majority (61-31) favor stricter regulation of financial companies.
This is all high stakes not simply because of results of the actual legislation, but as a political issue for November. Democrats hope they can paint the GOP as not only the "party of no" (sorry, Gov. Palin, the "party of hell no") but as tools of Wall Street. The GOP wants to continue to stir bailout rage and focus it on Democrats.