This Is What Winning Does

Wall Street and Republicans seem to be acknowledging privately that the White House and Congressional Democrats have real momentum now that they’ve passed the health care reform bill

Shelby’s recent outreach seems to reflect the new reality in the battle to tame the banks: Both sides recognize that the reformers have the momentum, given the way last month’s health care victory has unified Senate Democrats, and given the political peril for Republicans in appearing to do Wall Street’s bidding. But both sides also recognize that, p.r.-wise, the consumer agency tends to overwhelm other elements of the reform effort.

In light of this, Republicans seem to be settling on a strategy: Give the Democrats much of what they want on the consumer agency and bet that Democrats won’t be too picky about the rest. If the bet pans out, the industry and its GOP allies would, in effect, be trading a robust consumer agency for a chance to scale back a number of highly consequential but below-the-radar reforms. But will it?

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And yet, the longer you talk to such K Street denizens about the politics of financial reform, the more they concede that this is what the landscape may give them. This same person told me he sensed that Dodd was open to compromising on everything but the consumer agency. He added: “For the average American, it’s the only piece of the bill they can really sink their teeth into.”

Some Democrats have finally figured out that you need to use your governing majorities. I think we have the Republican strategy of say no to everything to thank for this. The Republicans decided not to work with the Democrats on any issue, even if they agreed with them. Weak-kneed Democrats started to panic but cooler heads realized that the country still needs to be governed, even if one party has collectively lost its mind.

Passing a health care reform bill has given Democrats more confidence. In fact, passing the bill has stopped the bleeding in the polls and has started to re-energize the Democratic base. Already the conversation changed from hapless, divided Democrats to crazy, divided Republicans. The media is talking about an extremely accomplished 1-year president and passing a financial reform package will cement that view.

Bill Clinton was right that voters prefer “strong and wrong.” Most people don’t follow the ins and outs of Congress enough to really understand most legislation. They gravitate towards the winners. Democrats won a bruising battle and hopefully this will make the next battle a little easier.