When it comes to Wall Street regulations, congressional Democrats have spent the year playing defense. But as the seventh anniversary of the Dodd-Frank Act approaches Friday, a coalition of progressive groups is pushing the party to get back on offense.
The groups — including major labor unions, lefty activists, faith-based organizations and consumer advocates, organized under the banner of "Take on Wall Street" — aim to crank up grassroots heat on elected Democrats. They want party leaders, though deep in the minority, to revive some of the get-tough measures they campaigned on last year, when they expected to win at least the White House.
The coalition’s agenda remains a work in progress. So far it includes proposals to close the carried interest loophole for investment managers; impose a financial transaction tax of .03 percent on most trades; end the deductibility of executive bonuses; revive the Glass-Steagall law’s separation between commercial and investment banking; and slow the revolving door between industry and government.
None of those ideas is new. And the coalition plans to build on them, says Shane Larson, the Communications Workers of America’s legislative director, who’s coordinating the coalition’s efforts.
It plans to get started now, since the collapse of the Obamacare repeal drive on Capitol Hill is giving way to a debate over a tax code overhaul. Larson says the coalition will “start a conversation about Wall Street paying its fair share” this week by firing up an email list that reaches hundreds of thousands of progressive voters.
The push comes as Democrats begin to reconsider a governing vision. The party is still reeling from its shock November loss, and leaders are divided over what their message should be as the midterm campaign season swings into view.
A Washington Post-ABC poll released over the weekend shows just 37 percent of voters believe Democrats “stand for something,” while 52 percent say the party “just stands against Trump.”
Coalition officials think an anti-Wall Street agenda could help solve that problem. A poll released Tuesday found broad bipartisan support for stricter industry regulation. The survey, commissioned by Americans for Financial Reform and the Center for Responsible Lending, shows 78 percent of respondents in favor of “tougher rules and enforcement” on the sector, versus 11 percent who say practices have changed enough that no more restrictions are needed.
“To us, it’s crystal clear,” Larson says, adding coalition members have been “frustrated” that Democrats haven’t yet devoted enough attention to kitchen-table concerns. “Democrats are focusing more on Russia than core economic issues that our members really want to hear people talking about.”
Democrats say they have only a limited ability to steer the conversation these days in the face of a news avalanche that’s so far consisted mostly of Russia revelations and the health-care debate (and the fact they don't control Congress or the White House). “Russia is a big deal in the news for reasons that are beyond anyone’s control besides Donald Trump,” Rep. Keith Ellison (D-Minn.), deputy chair of the national party, told me. “And we have been trying to protect this country from having their health-care stripped away. This has been the most salient issue that’s been in front of the Congress.”
Ellison, who also sits on the House Financial Services Committee, says Democrats will be talking more about the need to tighten the screws on big financial institutions. That would mark a shift for the party. Despite running just last year on a platform promising aggressive new regulations, Democrats have split this year over simply defending the status quo and endorsing tweaks to ease the industry’s burden. Says one party strategist in favor of a tougher anti-industry stance, "Some cover from these groups would be helpful."
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— A budget resolution now represents the key to unlocking what remains of President Trump's economic agenda. The House Budget Committee today is proceeding with a markup of its spending blueprint, a measure if adopted that would allow Republicans to pass a tax-code overhaul without any Democratic votes (which, of course, didn't work out so well for them on Obamacare). AP's Andrew Taylor reports: "But it also proposes trillions of dollars in cuts to the social safety net and other domestic programs and puts congressional Republicans at odds with Trump over cutting Medicare. It also would sharply boost military spending... Unclear, however, is whether GOP leaders can get the budget measure through the House. Conservatives want a larger package of spending cuts to accompany this fall’s tax overhaul bill, while moderates are concerned cuts to programs such as food stamps could go too far."
Congressional reporters and commentators were quick to note Tuesday that the measure faces long odds, and Republicans don't have any better options.
From Politico’s Rachael Bade:
.@SenateMajLdr says Senate will move 2 tax reform since repeal is toast. NOT SO FAST! They've got 2 pass a budget 1st. Good luck w/ that...— Rachael Bade (@rachaelmbade) July 18, 2017
From Roll Call's Jennifer Shutt:
At the moment there is no budget resolution in the Senate and the House doesn't have enough votes on the floor to pass its budget resolution— Jennifer Shutt (@JenniferShutt) July 18, 2017
Author and writer David Dayen:
I'm going to go ahead and predict no budget resolution for 2018. I'm 80% convinced so why not be bold https://t.co/FT2XpFNeYJ— David Dayen (@ddayen) July 18, 2017
From Politico’s Sarah Ferris:
With FY17 reconciliation left hanging, Meadows says why not just recycle for tax?— Sarah Ferris (@sarahnferris) July 18, 2017
Bc budget committee would revolthttps://t.co/atIg5YqbkF
Roll Call's Lindsey McPherson has this good rundown of the possible paths forward for a Republican budget resolution. There could be some fireworks at the markup today, especially if Rep. Mark Sanford (R-S.C.) follows through with this threat to offer a poison-pill amendment targeting a border adjustment tax.
— Financial markets likewise are skeptical that the Trump team will be able to deliver on the sweeping tax overhaul it's promised. The dollar tumbled to a 10-month low after the health-care bill's implosion stoked new fears among investors about the prospects for the administration's economic agenda, Lisa Twaronite of Reuters reports. And/but: Wall Street analysts are still holding out hope for a more targeted package of tax cuts, CNBC's Patti Domm reports.
— Meanwhile, the Obamacare repeal debacle may have taught the Trump administration there are limits to what it can accomplish, even with nominal control of both chambers of Congress. The White House is trimming its ambitions for the tax code overhaul it hopes to take up next. Administration officials are now privately talking about a corporate tax rate between 20 and 25 percent, Politico's Josh Dawsey and company report. That's a major move from the 15 percent rate that Trump has talked up publicly — and a bow to the reality that the math and politics of a tax code rewrite are exceedingly difficult, despite what Trump and his top officials have said.
— Trump is long on tough talk and short on action when it comes to trade. That's the conclusion Chinese governement officials have drawn from his first six months in office, a period they entered fearing what the new president might do to make good on his China-focused saber rattling on trade during the campaign. The Wall Street Journal's Jacob Schlesinger reports: "But Mr. Trump has since dropped his threats to impose drastic penalties against Chinese imports—an across-the-board tariff, or a formal charge of currency manipulation—and has so far focused on small market-opening agreements, instead..U.S. business groups, which had originally braced for the hostilities Mr. Wang referred to, are now growing worried the Trump administration may not press China hard enough for broad reforms they consider necessary to pry China’s economy open." The two sides meet in Washington today for economic talks.
Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross say they want to see some "concrete" steps by the Chinese to open their markets. Steve Holland of Reuters reports: "Ross said some initial deals announced in April, as part of a 100-day economic plan aimed at reducing the U.S. trade deficit with China, were a 'good start.' These include the sale of U.S. beef in China for the first time in 14 years and commitments to open up narrow areas of China's financial services sector, such as credit card services and credit ratings agencies. Some of these agreements are yet to be implemented, and there has been little evidence of progress on thornier issues, such as excess capacity in China's steel and aluminum sectors."
— Mexico and Canada likely see the early record of the Trump team differently. The Trump administration on Monday released its goals for renegotiating the North American Free Trade Agreement, and it includes what my colleague Ana Swanson calls some "fighting words." Here she walks through four points in particular from the 17-page document that the governments of our largest export markets won't be happy about.
— This feels like another unforced error on the Russia front by the White House: "Trump had undisclosed hour-long meeting with Putin at G-20 summit." Karen DeYoung and Phil Rucker report: "After his much-publicized two-and-a-quarter-hour meeting early this month with Russian President Vladimir Putin at the Group of 20 summit in Germany, President Trump chatted informally with the Russian leader for up to an additional hour later the same day. The second meeting, undisclosed at the time, took place at a dinner for G-20 leaders, a senior administration official said. At some point during the meal, Trump left his own seat to occupy a chair next to Putin. Trump approached alone, and Putin was attended only by his official interpreter."
The White House announced Tuesday that Trump will nominate former Utah Gov. Jon Huntsman to serve as ambassador to Russia. Huntsman, a Republican, served as Obama's first ambassador to China.
— Goldman Sachs's bond-trading unit turned in its second bad quarter in a row, prompting a sell-off and raising new questions about the firm's strategy. The Wall Street Journal's Liz Hoffman: "Goldman, once the fiercest trading shop on Wall Street, reported a 40% decline in its fixed-income trading business that lands it at the back of the pack among big U.S. banks to report quarterly results. The results will likely amplify criticism that Goldman hasn’t responded quickly enough to dramatic changes in trading trends and market conditions. A rejiggering of the division’s leadership last fall failed to jolt the desk from its malaise, which culminated in having its revenue surpassed in the first quarter by Morgan Stanley, Goldman’s rival historically weaker in debt trading."
— Morgan Stanley, meanwhile, beat expectations, posting a $1.76 billion second-quarter profit.
— Trump is set to nominate former Senate Republican aide Hester Maria Peirce to the Securities and Exchange Commission. Peirce, who was nominated by then-President Obama but stalled out in the Senate, is likely to face stiff opposition from Democrats. Eric Beech of Reuters reports: "Liberal firebrand Senator Elizabeth Warren is highly critical of Peirce, who is a member of the Federalist Society, an organization of conservative and libertarian lawyers. Peirce could be instrumental in carrying out Trump's plan to reform regulations imposed after the 2007-09 financial crisis and recession. She recently edited and contributed to a book published by the right-leaning Mercatus Center that called for totally restructuring the country's financial regulation." She'd fill one of two empty slots on the five-member SEC.
- The House Financial Services Subcommittee on Monetary Policy and Trade will hold a hearing on restricting North Korea’s access to finance.
- The Senate Banking, Housing and Urban Affairs Committee will hold a hearing on housing finance reform on Thursday.
- The House Financial Services Subcommittee on Monetary Policy and Trade will hold a hearing on “Monetary Policy v. Fiscal Policy” on Thursday.
- The Heritage Foundation will hold an event on social and economic trends on Thursday.
Here's what you need to know about the House GOP budget plan:
Washington reacts after the collapse of the GOP health-care bill:
The Post's Glenn Kessler explains: No spending cuts to Medicaid? Then no tax cuts either:
Fans of 'goat yoga' move to a different bleat: