The Weekly Strike-9/14-9/20

Good morning and welcome to the Weekly Strike, where we preview a busy week in politics. Last week was a lot about spectacle: the President gave an impassioned address to a joint session of Congress, and a cadre of angry right-wing groups descended on Washington to protest...something. But this week, we'll be delving into some pretty deep policy issues.

THE WHITE HOUSE: The President is marking another grim anniversary today, the 1 year anniversary of the collapse of Lehman Brothers, which brought our country into a full blown economic crisis. After two rounds of bailouts and the economic stimulus, we seem to have stopped some of the bleeding, but we have yet to address the root causes of the crisis. The President will attempt to do that today during a major speech on Wall Street. He will lay out plans for a financial regulation overhaul that he hopes will add the necessary oversight to prevent something like this from ever happening again. In my opinion, he should have pushed for this overhaul much sooner. Supporting the bailout of these companies without forcing them to change their behavior is not only bad policy, but it has been politically poisonous. A lot of Americans seem to be associating the bailouts with other anti-recession programs, and it is no doubt hurting the President's standing with political populists on both the left and the right. So what exactly will this plan look like? The Washington Post offers a good summary:

"Key pieces include a new federal consumer agency to oversee financial products such as mortgages and credit cards, expanded authority for the Federal Reserve to monitor the economy for systemic risks, streamlining the system of banking regulation, and creating a mechanism that allows the government to take over and unwind large, failing financial institutions. "

As always, the devil is in the details, but many analysts I trust seem to think the plan would be a step in the right direction. Of course, it would have to get through Congress first, which at the moment, is looking to be quite a challenge. The Senate Banking Committee, led by vulnerable Senator Chris Dodd (D-CT) has largely rejected a lot of the ideas put forth by the White House, especially ceding more power to the Federal Reserve. The overarching problem is that an army of banking and financial lobbyists, who have a stranglehold on lawmakers of both parties, will try to exert influence over members of Congress. Such is life in our broken system, and it will only get worse if the Supreme Court, as expected, undoes decades worth of campaign finance restrictions.

The President later has lunch with Bill Clinton in New York City. I'm willing to venture a guess that they'll talk about health care. Tomorrow, the President visits a GM plant in Ohio. The rest of his schedule this week remains unannounced, but I expect him to hold a couple of health care-related events. He held a boisterous rally this weekend in Minnesota that echoed some of his great campaign stops. He had some real emotion and passion in his voice, something that we don't often see anymore.

THE HOUSE: Congress, after a slow first week back from the August recess, kicks into full gear in the next few days. The House takes up suspension bills today and tomorrow, before moving on to two significant pieces of legislation. The first is a bill to authorize spending on research and development of advanced vehicles. The legislation is designed to promote cars that are fuel efficient and low emissions. It is sponsored by freshman Rep. Gary Peters of Michigan. I expect this solid bill to pass pretty easily, though it does authorize some spending, so most Republicans will probably vote no (except maybe the ones from Michigan).

The major piece of legislation to be considered is a comprehensive education bill. Considering it's breadth and importance, I'm surprised it hasn't been talked about more. The biggest new policy contained in the bill is to stop government payments to student loan companies, and instead have the government give out direct loans themselves. I cannot understate how good of an idea this is. Not only will the government offer loans on more favorable terms, but it also doesn't have the high overhead costs of private companies. The bill is projected to save the government about $100 billion over ten years. That's why the words "fiscal responsibility" are in the title. Nevertheless, expect knee-jerk opposition from Republicans, who are ideologically against the government doing anything. Some of the money saved in the bill will be given back to the treasury to help pay down the deficit, while the rest will be reinvested in early childhood education programs and school modernization projects. Good, good and good. Another major component of the bill is a plan to increase the maximum annual Pell Grant scholarship fund. The scholarship will now be indexed for inflation as well.

Another plus of this bill is that, since it saves the government money, it can be done using the reconciliation process. As we've explained before, this will allow it to come up in the Senate under expedited procedures that only require 50 votes for passage. This is key, because there are some centrist Democrats (like Ben Nelson of Nebraska) who want to dilute the bill because of the heavy influence of the student loan industry in their states.

I think we can be pretty much assured that the bill will pass the House in its current form, and will be sent to President Obama's desk one way or another by the end of the year. When it is, it will be a major legislative accomplishment.

THE SENATE: The deliberative body will dither away more time working on its 5th of 12 annual appropriations bills this week, the Transportation, Housing and Urban Development bill. The House has passed all 12 of its bills, and is waiting for the Senate to act by the end of the fiscal year on September 30th. House and Senate conferees are supposedly working to iron out differences on the bills that have passed both chambers. I still expect Congress won't be able to finish appropriations work by the end of the month, and they'll have to pass a continuing resolution to keep the government running temporarily.

We'll also still be on the lookout for a health care bill to emerge out of the Senate Finance Committee. Chairman Max Baucus, who has an awful track record when it comes to meeting deadlines, says he will release the full bill tomorrow and hold hearings next week. We'll have to see about that. The finance committee bill will not include the Public Option.

That's it for now, see you tonight and leave some comments!