As Democrats Trumpet Financial Reform, GOP Targets 'Obamacare'

Democrats call it Wall Street reform to protect Main Street from greed and economic trauma. Republicans call it a job-killing, overpriced morass of regulation. With passage of the financial-regulations reform bill, headed for President Barack Obama's signature next week, another battle line has been drawn for November.

For Obama and his party, it is another mark in the win column. As Democratic Party Chairman Tim Kaine put it, "We now have added Wall Street reform to health care, credit card and student loan reform," all to curb the "abusive practices" of "corporate special interests." That is the overarching tale Democrats want to tell, and the Wall Street bill is the cornerstone. "This will be a vote that Democrats will talk about through November as a way of highlighting the choice that people will get to make in 2010," White House Press Secretary Robert Gibbs said. Richard Trumka, president of the AFL-CIO, called it "a defining line in the sand."

Beyond the three GOP senators who voted "yes," Republicans offered their customary response to an Obama accomplishment: predictions of doom and calls for repeal. House Republican Leader John Boehner, for instance, said the law-to-be should be repealed and replaced with "commonsense things that you should do to plug the holes in the regulatory system that were there, and to bring more transparency to financial transactions."

Much as most Republicans dislike the product, party strategist Whit Ayres predicted voters will hear a lot more about it from Democrats than from Republicans. He said the centerpiece of GOP campaigns will and should be "Obamacare." The new health law "is so much higher profile and affects every single voter directly and personally in a way that financial regulatory reform does not," he said.

A couple of hours after the Senate vote, as if to illustrate Ayres' point, Boehner sent out a release trumpeting continuing state opposition to the new health law, or as he calls it, a "job-killing monstrosity." Democrats, meanwhile, circulated press releases in Louisiana, Iowa, North Carolina, Arkansas and elsewhere attacking Republican senators for "standing with Wall Street banks" and against consumers in their states.

If the new financial regulations work the way Democrats hope, and Republicans doubt, voters will be affected in that they won't have to endure future foreclosures, job losses, credit crunches and all the other dysfunctions and stresses of the 2008 meltdown. That is a tough argument to make in terms of immediacy. But scattered Republicans are making the story easier to tell by doing things like apologizing to BP because the administration roped it into setting up a $20 billion oil-spill escrow fund, or saying jobless benefits should be offset with other spending cuts but that isn't necessary when you are handing out tax breaks to the wealthy.

In some cases the parties seem to be talking across a great chasm. Many Republicans say the bill ignores the root cause of the financial crisis -- risky loans made by the government-backed agencies Fannie Mae and Freddie Mac. Democrats see a completely different root cause. "We all know the economic crisis . . . started in the financial markets," Senate Majority Leader Harry Reid said after the vote. "If we're going to make sure this disaster never happens again, the solution has to start here, and it has."

Political jockeying is under way over which party is being nicer to Wall Street. Boehner and other Republicans say Democrats gave the gift of taxpayer bailouts to their "Wall Street allies." But Obama said flatly, in remarks after passage, "There will be no more taxpayer-funded bailouts, period." The argument is over a new requirement that large financial institutions give the government a living will, or dissolution plan, so that if they are on the verge of failing and creating a systemic risk, they can be shut down in an orderly way. Eli Lehrer, a senior fellow at the conservative Competitive Enterprise Institute, said the bill is at minimum "a good-faith effort" to avoid future bailouts.

Democrats contend Republicans are the real Wall Street allies, huddling and fundraising with lobbyists who tried to kill provisions such as a Consumer Financial Protection Bureau and first-time regulation of the lucrative, $600 trillion derivatives market. The bill passed despite a "massive lobbying effort by the financial industry," Obama said Thursday.

Some Republicans said the new law would have unanticipated effects on Main Street, such as making it harder to borrow money. Sen. Judd Gregg (R-N.H.) lamented the new $850 million consumer protection bureau, which he said would be unaccountable and counterproductive. Consumer protection, to make sure people don't get duped, tricked and trapped, was one of Obama's non-negotiables and plays directly into what Ayres calls Democrats' "friend of the little guy" narrative.

Ayres predicts the financial reform bill won't take Democrats as far as they'd like: "People are so consumed and upset by what they see as a runaway federal government that's bankrupting the country, that it's going to be hard for the Democrats to get traction on this particular bill."

That, of course, is the overarching Republican narrative -- the ever-bigger federal government, spending ever more, mortgaging our children's futures to China. The new financial law could be cast in that light. It establishes new entities and restructures old ones, and will cost $19 billion to put in place over 10 years. To Democrats, that's cheap compared with another lost decade, another crisis so massive it costs 8 million people their jobs. They believe in their diagnosis, their prescription and their new law. The irony is that the economy is still so bad, many voters are not inclined to trust the people in charge. Which would be them.