Dems in major trouble

When the New York Times comes out says democrats are rattled, you know they are troubled.


WASHINGTON — It was a telling glimpse into the state of mind of rattled Senate Democrats.

Worried that they were going to be skewered for pushing a jobs bill that was stuffed with business tax breaks and pork, Senator Harry Reid, the majority leader, pulled the plug Thursday on a rare bipartisan proposal, gambling both with the party’s best chance of posting a needed legislative win as well as with President Obama’s new push for cross-party cooperation.

The surprise move by Mr. Reid, partly in response to fears from lawmakers that they were going to take a pummeling on cable news, has put the future of the jobs legislation in question and showed how the criticism heaped on their health care plan and the loss of the Massachusetts Senate seat have put Democrats in a protective crouch.

At the same time, Mr. Reid’s gambit puts pressure on Republicans to back elements they had already endorsed as part of the broader package, rolled out by top Democrats and Republicans on the Finance Committee, a note the White House sounded Friday.

“I think the legislation that Senator Reid will move when the Senate comes back into town will garner bipartisan support,” said Robert Gibbs, the White House spokesman.

Yet if Mr. Reid cannot assemble 60 votes to advance a slimmed-down measure he is proposing when the Senate returns from a 10-day recess on Feb. 22, he could be accused of turning a potential bipartisan victory into a Democratic defeat. He seemed ready to try to turn the tables on Republicans, warning them that they would be guilty of opposing popular provisions they were already backing as part of the broader, more costly bill.

“Each piece of this bill enjoys bipartisan support,” Mr. Reid said of his $15 billion package, which would give payroll tax exemptions for employers who put unemployed people to work and seeks to spur investment in public works projects. “I look forward to swift action on this measure that will create and save dependable jobs.”

But Mr. Reid’s rollout was messy, sent conflicting signals and was highly instructive about the state of relations between the two parties as well as among Democrats.

The events began with Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, and Senator Charles E. Grassley of Iowa, Mr. Baucus’s occasional Republican partner in bipartisanship, when they released an $85 billion plan that included the payroll tax holiday and a slew of other provisions.

Among them were the extension of billions of dollars in corporate tax breaks, but some were even more off the point of job creation, like agriculture assistance for Arkansas, where Senator Blanche Lincoln, the Democratic chairwoman of the Agriculture Committee, is in a difficult fight to hold her seat.

Still, the measure drew accolades from the left and the right, a virtually unheard of occurrence in the Senate these days and one viewed as a potential sign of a thaw in the partisan freeze. Even the White House weighed in, with Mr. Gibbs distributing a supportive statement on Thursday.

So it was a bit shocking when — just hours after the White House statement — Mr. Reid left a Democratic luncheon and told reporters he was jettisoning the bipartisan proposal for a smaller package that would be the first installment in a comprehensive Democratic jobs agenda.

At the White House on Friday, Mr. Gibbs suggested that even the administration had been caught off guard by Mr. Reid’s shift, saying, “I don’t know the degree to which he talked to us about that.”

As lawmakers, top aides and news organizations tried to sort out what had happened to change the approach, a few things became clear.

First, liberal Democrats in particular were unhappy with the Finance Committee plan, believing that Mr. Baucus had conceded too much to the Republicans and was putting Democrats in danger of attacks for turning a jobs bill into a legislative “Christmas tree” loaded with ornaments for constituents back home. Indeed, House Republicans were already preparing to ridicule it despite the inclusion of elements favored by their party.

“You know,” said Senator Sherrod Brown, Democrat of Ohio, “it looks more like a tax bill than a jobs bill to me, and I want a jobs bill.”

Second, a year of poisonous partisanship has taken its toll on trust in the Senate. Democrats said they remained skeptical that Republicans would follow through on their signals of support for the bipartisan measure. And even if they did, Democrats feared that Republicans would drag out the process, forcing them to use up valuable floor time for a measure that should be approved quickly.

Democrats pointed to a private meeting Tuesday between Senator Mitch McConnell of Kentucky, the Republican leader, and Mr. Reid at which, Democrats said, Mr. McConnell would not commit to putting Republican muscle behind the measure.

Republicans pointed out that lack of backing from Mr. McConnell had hardly prevented Democrats from forging ahead with other bills, and they were fuming about Mr. Reid’s maneuver.

An aide to Senator Orrin G. Hatch of Utah, the Republican co-author of the payroll tax plan, said Saturday that he would oppose the measure on the initial procedural vote in protest, depriving Democrats of one of their most likely allies. Another party official said Republican senators might ultimately vote for the bill, but only after making their unhappiness known.

And the Republicans might be only the beginning of Mr. Reid’s problems as he tries to chalk up a victory on the economic issues that are a top election-year concern of many voters.

Speaker Nancy Pelosi, who helped shepherd a much more expansive jobs and economic package through the House late last year, has her own ideas about what the legislation should look like.

Ms. Pelosi said Friday that she intends to ensure that critical elements of the House measure are in any final package.

Evidently, achieving bicameral harmony can be as hard as finding the right bipartisan balance.

Dems in trouble

Just when you think the news can't get any worse for the dems in Washington someone comes out with an article explaining how dire the situation really is for them

With all the attention paid to the health care battle, ACORN, and the president's "Full Ginsburg" appearances on five Sunday talk shows, few people noticed a hearing with an exceedingly boring title -- "Proposals to Enhance the Community Reinvestment Act" -- held last week in the House Financial Services Committee. But the session marked a key moment in the ongoing battle between Republicans and Democrats over what caused our current financial woes -- and how we might best avoid getting into the same trouble again.

At the hearing, and in others across Capitol Hill, Democratic majorities are pressing hard to expand some of the very policies that led to the reckless home lending that in turn helped lead to the great financial meltdown. If Chairman Barney Frank and his fellow Democrats have their way, we'll do it all again -- and more.

At issue last week was H.R. 1479, the Community Reinvestment Modernization Act of 2009, sponsored by Democratic Rep. Eddie Bernice Johnson. It would expand and strengthen the 1977 Community Reinvestment Act, which required banks to make loans in low-income areas that many lenders had traditionally shunned.

After the meltdown, some conservatives blamed the CRA for almost solely causing the crisis by requiring banks to make risky loans to unqualified borrowers. It was an unfair charge. "CRA had at best an incremental role in the U.S. housing debacle," says J.D. Foster, an economist at the Heritage Foundation. But CRA did help create the conditions in which disaster could occur.

The problems began in the 1990s, when Congress made it harder for lenders to do business if they had not passed the CRA "exam" -- that is, if they had not met the government-imposed standards for loans to low- and moderate-income borrowers.

"From 1995 on, there was an incredible push by the Clinton and Bush administrations in every way they could -- CRA, Fannie Mae, Freddie Mac, and other ways -- to increase the homeownership rate," says Russell Roberts, a professor of economics at George Mason University. "What that did was to push up the price of housing, and that made it imaginable to lend money to people you never would have lent money to, on terms you wouldn't have done before."

In particular, Fannie Mae began to aggressively promote homeownership using the Community Reinvestment Act to give loans to people who couldn't afford them. Fannie went to bankers and said, make as many CRA loans as you can; we'll buy them and take them off your hands. "Our approach to our lenders is 'CRA Your Way,' " top Fannie executive Jamie Gorelick told the Mortgage Bankers Association in 2001. "Fannie Mae will buy CRA loans from lenders' portfolios; we'll package them into securities; we'll purchase CRA mortgages at the point of origination. ..."

Fannie promised to buy billions and billions of dollars worth of CRA loans because it was under pressure to do so from the Department of Housing and Urban Development, which in turn was under pressure from Congress, which set ambitious quotas for low- and moderate-income loans.

The policy ended in a lot of people losing their homes. Now, Johnson's bill would ensure more of that by applying CRA's lending requirements not just to banks but to non-bank institutions like credit unions, insurance companies, and mortgage lenders. It would also make CRA explicitly race-based by, in Johnson's words, "requiring CRA exams to explicitly consider lending and services to minorities in addition to low- and moderate-income communities."

Republicans on the Financial Services Committee strongly oppose the plan. "Instead of looking to expand the number of institutions that must abide by CRA regulations, I think we should reassess the role this and other government mandates played in the financial collapse and consider scaling it back," California Rep. Ed Royce said at the hearing.

In private conversation, other Republicans were more emphatic. "There is clearly arguable evidence that the CRA is at the root of this financial meltdown," said one GOP committee member. "So what do they do? They try to expand CRA."

That's an overstatement of CRA's role in the housing mess, but it's right about the Democratic plan. Denying that CRA, Fannie and other institutions played any role in setting the stage for disaster, they're proposing more of what helped get us into trouble in the first place. It's no way to fix the problem.