Sunday, April 25, 2010

Democrats Should Look Before they Leap into Immigration Reform

For a while, the White House was positioning to take on climate-change after financial regulation reform. Now that Congress is closing in on a deal on financial regulation reform, rustlings are underway for immigration reform to displace the climate-change bill to be the new issue du jour. This would be a bad idea for the Democrats.

Although Democrats think that they have an election year issue which could help turn out the Hispanic vote, Republicans will say that the economy is the American peoples' top priority, and if the Democrats take on immigration reform, they will feed the narrative that Democrats seem more concerned with every other priority but that of cash-strapped, jobless middle class Americans trying to survive this recession. It will reinforce the Tea Partiers' belief that Washington is tone deaf, and intent on consolidating its powers to wreck havoc on hardworking Americans.

All this Democrats may well weather if they could pass an immigration bill soon and in time for the November elections. But that is not going happen because Democrats are themselves divided about what to do with immigration reform. Democrats will enjoy the short-term gain of criticizing Arizona's new law on immigration, but they will also bear the longer-term costs of failing to find an alternative solution to which all can agree. Labor, after all, has never been particularly pro-immigration because immigrants constitute a massive contingent of workers who could and probably would threaten labor's collective bargaining unity. Put another way, while Republicans are relatively united behind Governor Jan Brewer and Arizona's new immigration law, Democrats are much less united in opposition. If Democrats get started on this issue, it would become an unfinished requiem gnawing at their credibility through November. If the White House possessed barely enough capital to weather the health-care storm; it has none left for another contentious fight.

Democrats are shooting in the dark in search of a game-changing pivot which could derail the train-wreck some are anticipating in the November elections. When Barbara Boxer is receiving the President's fund-raising help, when the President's and Vice-President's former seats in the Senate, and Harry Reid's seat are all under siege, we know that Democrats are not panicking without cause. But they should also remember that the President's party almost always loses seats in mid-term elections; and that by protesting too hard against history, they could end up only in confirming it. The White House should be wary of the cheap thrill of calling Republicans xenophobic and taking on an issue too big that it would fail.

Sunday, April 18, 2010

Obama means Business

The Securities Exchange Commission has filed charges against Goldman Sachs as the Obama administration has taken up regulatory reform of the financial markets. The two events are not unrelated. They reveal the percepton that the economy has turned the corner, and that the Obama administration is now ready to mean business, literally.

For a year now we have heard about the potential for a "double dip" in the economy. Fortunately, the conventional wisdom hasn't materialized. Wall Street has a way of swinging between extremes, between the ridiculous hubris that created the housing bubble (or the dot com bubble) and the abject despondency whenever a bubble is burst. If only businesses and investors could find the Aristotelian mean between irrational exhuberance and paranoid pessimism.

By most indices, the economy is on its way to recovery. The chances of a double dip on the economy are now so near zero that the Obama administration has switched mottos from "too big to fail" to "big enough to punish." For the fact is there is a cosy relationship between government and business, and a correlation between the Dow Jones and Gallup. Obama could not afford to regulate the big banks while the economy was spiralling out of control, but he and Geitner appear to think that the coast is now clear to do so.

It would appear that the SEC parts company with unregulated capitalism at the 11,000 mark. Last Friday, federal regulators filed fraud charges against Goldman Sachs over its dealings in subprime mortgages, precipitating a 125-point drop in the Down Jones. Consider the confidence of the SEC when these charges against Goldan Sachs occured in the middle of the day on Friday (and not at the start or end), and also at a time when options were expiring for the month (so investors who took out earlier plays on Goldman were left unable to hedge).

Meanwhile, a war is brewing between the two political parties about financial regulation and a bill coming out from the Senate Banking Committee which would, among other things, give federal regulators the authority and a $50 billion fund to control and wind down too-big-to-fail banks at imminent risk of destabilizing the wider economy. Republicans are pushing back hard against what they call "bailout authority" but their real beef is not with bailouts, which Democrats say that the fund would prevent, but the bill's provision to regulate financial derivatives: the instruments of mischief that led to last year's recession. This is at the heart of the bill, so important that President Obama has issued a (rare) veto threat against any bill that does not regulate what Warren Buffet calls "financial weapons of mass destruction."

Now that the market is stable enough to weather regulatory intrusion, Obama means business. With the health-care issue out of the way, regulating Wall Street has become Obama's next top priority. But this time, it will be easier. Because everyone - liberals and tea partiers alike - concedes that only big government can take on big business, this is ultimately going to be a winning issue for the administration.

Saturday, April 10, 2010

Vacancy in the SCOTUS and the Politics to Come

When Justice John Paul Stevens underwent confirmation hearings for his nomination to the Supreme Court in 1975, he was not even asked about his stand on Roe v. Wade. Gone is this era of unpoliticized nominations proceedings, and there are now a myriad of political considerations that will need to go into the choice of nominee. That said, while there will be hype and hoopla in the weeks to come, the fact is that President Obama has no chance of altering the ideological balance of the Court in his favor and can only attempt to minimize the losses associated with exchanging the most senior liberal justice on the bench with the most junior one. Since Stevens has stood reliably with three other liberal justices in the Court since the mid-90s, Obama will at best succeed only in maintaining the status quo in which the right-leaning Justice Anthony Kennedy often casts the deciding vote. More likely than not, Obama would have to settle on a nominee who will be considerably less liberal than Stevens, because we are now in a very different era from when Stevens was confirmed by a vote of 98-0 after 19 days of hearings in 1975.

Conservatives, on the other hand, have a lot to gain if they bring in a fifth conservative Justice, perhaps under cover of a Trojan Horse (which some say - inaccurately, I think - Justice Stevens was in 1975). That Stevens is now characterized as the liberal lion in the Court is evidence enough of the Reagan jurisprudential Revolution. When Stevens was appointed by Gerald Ford, he was a centrist Republican and often the maverick who did not agree with colleagues on either ideological side. With his retirement, the Reagan Revolution in the Court would be complete, with the majority of the Court now having been appointed by Republican Presidents Reagan, Bush 1 and Bush 2.

In order to minimize liberal losses, Obama will likely do two things: pick a young justice, and one further to Left on one or two key liberal issues which are relatively orthogonal to Tea Party concerns and therefore will not precipitate an intense outcry.

1. The retirement of John Paul Stevens unquestionaby weakens the liberal block in the Court because even if the new Justice were as reliably liberal as Stevens was, s/he would not be as senior. With the departure of the most senior member of the Court who also happens to be liberal, the liberal block in the Court will lose the agenda-setting power of their "ranking" member who, when the Chief Justice is not in the majority, typically decided which of the Associate Justices would write the majority's opinion. The next most senior Justice on the Court following Stevens is the arch-conservative Antonin Scalia, appointed by Reagan. Seniority also matters because during their private conferences, Justices speak and vote according to seniority. Liberals would lose an experienced jurist who has spent 34 years on the Court exploiting his seniority and skills to build majority coalitions with the inclusion of the occasional conservative justice. And unfortunately for liberals, the two justices appointed by Bill Clinton, Ruth Bader Ginsburg and Stephen Breyer, are also among the oldest on the Court. If Obama is thinking about locking in his legacy, he will note that for the average age of the liberal judges to be equal to the average age of the conservative judges, his nominee will need to be 57 years old.

2. On the brighter side for Obama will be the realization that this battle is his to lose. The Senate has historically endorsed the president's nomination, though there are 12 exceptions to this, with Reagan's nominee, Robert Bork, being the most recent example. (President Bush withdrew Harriet Myers' nomination before it came to a vote.) The Senate has never filibustered the nomination of an Associate Justice, though the Republicans did launched a filibuster against the promotion of Associate Justice Abe Fortas to Chief Justice in 1968. Democrats tried to filibster Samuel Alito's confirmation, but then ultimately voted 72-25 to invoke cloture. If even Sonia Sotomayor, who had made certain controversial remarks about the wisdom of a latina over white male judges ended up with a positive vote of 68-31, then Obama is likely to win the nomination battle. Knowing this then, he could probably afford to go more to the Left to fill a vacancy created by the most liberal justice presently sitting on the Court. Liberal groups will insist on someone who would fill Stevens' ideological shoes, so Obama must and probably will appease them to some degree. But he would be wise to take heed of rise of the libertarian faction within the conservative movement (in the Tea Party Movement and the strong showing of Ron Paul in the CPAC straw poll and in the Southern Republican Leadership Conference straw poll on Saturday) to know to which part of the far / further Left he should not venture when picking his nominee.

Monday, April 5, 2010

The Obama Presidency 2.0

If September 11 reset the George W. Bush presidency, the passage of health-care legislation has reset the Barack Obama presidency. After an entire year in which health-care reform dominated the agenda of the Obama White House, the President has now been presented - now that perhaps the most divisive issue on the Obama agenda has been temporarily settled - with an opportunity to reset the emerging narrative and priorities of his administration, and the tone of political debate in Washington.

Obama's emerging blueprint for the next couple of months indicates a chastened president aware that he spent more political capital than he had expected to spend on an issue that was never at the top of his list of campaign promises of 2008, only to end up with a compromise health-care bill that repulsed Republicans and failed to amuse not a few liberal Democrats.

Obama now intends to find compromise between issues, not within them. The game plan now is to give some to the Republicans on some issues, like off-shore drilling, and some to the Democratic base on some issues, like nuclear disarmament. But to give to both sides on the same issue, Obama will likely no longer do. One thing the President has learned is that compromise on the same issue leaves a bitter taste in everyone's mouth; patronage is most rewarding when it is distributed at different times to all parties, not simultaneously shared.

So this Thursday, the President meets with Russian President Dmitri Medvedev in Prague to sign a nuclear arms control agreement for both countries to reduce their arsenals by 30 percent. Later this month, Obama will host a Summit for world leaders on nuclear security. And Obama has installed union counsel Craig Becker to the National Labor Relations Board, much to the chagrin of business leaders.

Similarly, Obama is making overtures to the Republicans, though in smaller quantities. He has thrown in his support for oil drilling in parts of the Atlantic and Alaskan coasts as part of his "comprehensive energy policy." And the administration looks set to reverse its position that 9/11 mastermind Khalid Sheik Mohammed and his henchmen be tried by a civilian court in New York and not in a military tribunal.

Whether or not Republicans appreciate the bone Obama has thrown to them, Obama appears to have learned a deeper lesson about politics and bipartisanship in Washington. American presidents typically do not thrive on single-issue politics, in part because bipartisanship is very difficult to achieve on the same issue because the best outcome that could be achieved is that no one gets what they want. When presidents put all their eggs in one basket, they appear parochial and are unable to dodge blame when they fail to deliver on their signature issues, or claim credit for other accomplishments which may exonerate their failure to deliver on their major priority. Politics is a fluid game which rewards multi-tasking presidents. Obama will not (again) take on one massive political challenge, but many medium-sized ones in the year ahead to rebuild his political capital. He has now learned that several badges look better than one medal, and that he needs to be ale to deliver more than one applause line when he parades his accomplishments in the State of the Union address of 2012.