Republicans and Democrats alike have been gearing up for battle on financial reform, with GOP senators united in their opposition and Democrats all but daring them to filibuster. But if it comes to a fight, will the Republicans have any backup outside Capitol Hill?
Tax Day rallies last week in Washington, D.C., were devoid of signs, slogans, and speeches on the finance bill, and influential right-leaning websites like Red State and Hot Air have all but ignored the issue this week, despite major movement on the Democrats’ legislation. There are some exceptions—Sen. Bob Corker (R-TN) took at least a little heat from activists for playing ball with Democrats on the legislation last month—but by and large there’s been no high-profile campaign to defeat the bill, and a number of conservative activists concede that the grassroots are inactive.
“It’s almost like the whole grassroots movement can’t get loose of [health care]. Because of the repeal issue, the battle isn’t over. The Tea Party movement is not moving on.”
Dick Armey, president of Tea Party organizer FreedomWorks, acknowledged in an interview that his group has yet to make its mark on the debate.
“We haven’t had a chance to study it,” Armey said. “We have a general skepticism that [Democrats] wouldn’t know how to regulate the financial industry.”
Karen Hoffman, founder of the conservative group DC Works for US, attributed the lack of interest primarily to the Tea Partiers’ continued involvement in health care. For Congress, the debate over the Affordable Care Act ended with its passage, but the Tea Party movement is still organizing long-shot campaigns to repeal the law, challenge it in court, and undermine its provisions on a state level.
“It’s almost like the whole grassroots movement can’t get loose of it,” Hoffman said. “Because of the repeal issue, the battle isn’t over. The Tea Party movement is not moving on.”
Phillip Dennis, founder of the Dallas Tea Party and state coordinator for the Tea Party Patriots, said he was largely unaware of the finance legislation, but expected it to stir a reaction eventually.
“I think it will become more on the radar as it becomes closer to a vote,” he said. “I don’t think a lot of people understand it yet and the details are just starting to come out.”
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• Obama’s 7 Broken Promises It may be too late for the Tea Party movement to organize, even if it can be persuaded to take the Republicans’ side. A bill could come to the Senate floor as early as Wednesday, and the administration is aiming to fast-track the legislation. Progressive groups are starting to become active on the issue: The AFL-CIO is planning a major protest on Wall Street on April 29, while the Democratic National Committee’s grassroots arm, Organizing for America, is calling on its members to lend their support to the bill. Reform supporters have also received an unexpected spate of encouraging news in recent days, particularly the Securities and Exchange Commission’s complaint against Goldman Sachs, a development that could lend momentum to their efforts.
“I think that [Goldman Sachs] is a game-changer in that it reinforces the need for comprehensive financial regulatory reform,” said Brandon Rees, deputy director of the AFL-CIO’s office of investment.
Heather Booth, executive director of Americans for Financial Reform, told The Daily Beast that the Goldman case “certainly underscores the need for real regulation to rein in the banks and rein in this type of risky behavior.”
While a number of experts on the left have criticized the proposed financial legislation, saying it does not go far enough, the pro-reform camp has been buoyed by an unexpectedly strong bill on the Senate side, a surprise to observers who expected its provisions would be weaker than the already-passed House bill. Booth called Sen. Blanche Lincoln’s (D-AR) recent decision to crack down on the derivatives market with tougher restrictions “stunning,” given the widespread expectations that she would water down regulation in committee.
“Most people say the House is the high-water mark and bills get weaker in the Senate, but the opposite is happening,” Booth said.
As for Lincoln’s counterparts on the right, Booth suggested that Republican leaders may be hesitant to engage the grassroots on the issue out of fear that they might become suspicious of Wall Street’s shared opposition to the bill—banks spent more than $500 million in campaign contributions and lobbying efforts in 2009 alone.
Booth’s biggest fear, she said, was that like the phony “death panels” meme during the health-care debate, an organized effort to portray reform, falsely, as a “bailout bill” could spread to the Tea Party movement and incite protests. Senate Minority Leader Mitch McConnell (R-KY) became the most prominent Republican to make that case last week when he said in a floor speech that the proposed bill “not only allows for taxpayer-funded bailouts of Wall Street banks; it institutionalizes them,” but Booth noted that the idea has already percolated for several weeks in right-wing circles. Indeed, McConnell’s language was nearly identical to a strategy memo issued by Republican language guru Frank Luntz more than two months earlier.
The “bailout” meme might be over before it had a chance to take hold, however. On Tuesday, McConnell appeared to walk back his remarks a bit, saying in a floor speech that “both parties agree on this point: no bailouts. In my view, that’s a pretty good start” and that he was “heartened to hear that bipartisan talks have resumed in earnest.”
Benjamin Sarlin is Washington correspondent for The Daily Beast. He previously covered New York City politics for The New York Sun and has worked for talkingpointsmemo.com.