Washington’s passage of financial regulation last week served as a perfect reminder of so much that is wrong with DC.

Despite moderate legislation (I would say “watered down”), financial regulation only passed along essentially party lines. With elections having become endless year-round campaigns, we are left with a process where all legislation is examined only for political gain/loss and not policy implications. All of us, democrats and republicans alike, lose as a result.

Here in the 2nd District we have a front row seat to this disappointment. When Wall Street needed help, Congresswoman Schmidt was there to vote in favor of their bailout. However when the time came to vote to pass some basic, common-sense measures to ensure that taxpayers were not once again holding the bag for Wall Street’s excessive risktaking, Congresswoman Schmidt voted no. She has chosen to side with the interests of Wall Street bankers over those of her constituents.

All of this goes back to a climate in Washington that values winning elections and the preservation of power above all else. Preying on this, special interest groups are all too eager to step into the void with large checks to help their handpicked candidates win elections. So it is no surprise that groups like Wall Street get to write their own legislation and get hundreds of billion dollars in help when they need it. They have purchased the best representatives that money can buy.

Back to the financial regulation legislation– I don’t believe the present version of the bills go far enough. Sen. Sherrod Brown has proposed an amendment, Brown-Kaufman, which would be an excellent step to cap the size and leverage of the biggest banks. If we wish to ensure we don’t have a repeat of 2008′s disastrous events we must make “too big to fail, too big to exist.” So far this amendment has faced massive opposition from the army of lobbyists in Washington and their allies in Congress.

This is a great article on what’s going on behind the scenes of financial regulation. Great read.

Rep. Obey of Wisconsin announced his intention to retire after over 40 years in the US House. In his release, he clearly lays out so much of what is wrong with Washington and crippling our nation. The whole thing is very much worth a read, but here’s a must-read section:

“All I do know is that there has to be more to life than explaining the ridiculous, accountability destroying rules of the Senate to confused, angry, and frustrated constituents.

I absolutely believe that, after the economy returns to a decent level of growth, we must attack our long-term budget deficit. But, perhaps I expect too much because, in addition to an attack on the federal budget deficit, I also want to see an equal determination to attack the family security deficit, the family income deficit, and the opportunity deficit which also plague the American people.

I am, frankly, weary of having to beg on a daily basis that both parties recognize that we do no favor for the country if we neglect to make the long-term investments in education, science, health, and energy that are necessary to modernize our economy and decline to raise the revenue needed to pay for those crucial investments. I do not want to be in a position as Chairman of the Appropriations Committee of producing and defending lowest common denominator legislation that is inadequate to that task and, given the mood of the country, that is what I would have to do if I stayed.

I am also increasingly weary of having to deal with a press which has become increasingly focused on trivia, driven at least in part by the financial collapse of the news industry and the need, with the 24-hour news cycle, to fill the air waves with hot air. I say that regretfully because I regard what is happening to the news profession as nothing short of a national catastrophe which I know pains many quality journalists as much as it pains me. Both our professions have been coarsened in recent years and the nation is the loser for it.”

This is exactly why I’m running for Congress. This is exactly what our campaign is all about. We are picking up this fight to repair a Washington that has badly failed the American people. I look forward to working with you in our journey to November and then in making it a reality.

There are a lot of things wrong with the 2009/10 version of Health Care reform. The process was horrific: backroom deals for votes in exchange for “favors,” a glaring absence of tort reform, no true drug pricing pressure, and it’s still unclear whether insurance companies will actually have to truly compete. A complete lack of bi-partisanship on the bill is partially to blame for all these failures and why the more meaty issues were left unaddressed — moving from an employer based system to a consumer driven one, shifting towards bundling as a pricing model, etc.

However, nothing is so wrong with this version of Health Care reform that would make it preferable to doing nothing. The status quo guarantees $35+ trillion in additional government debt in the coming decades due to shortfalls in Medicare and Medicaid. The status quo guarantees that many more small businesses will have to shutter and larger enterprises will accelerate their movement of jobs overseas. Perhaps worst of all, the status quo guarantees to continue to devastate the lives of millions of Americans and thousands of families in Southern Ohio. With mounting job losses and growing job insecurity, families are increasingly going without coverage, without care of any kind, hoping that things somehow work out. Unfortunately hope is not an effective strategy and the leading cause of bankruptcies in America (medical bills) will only cast a larger shadow.

This 09/10 version of reform is just the latest in a long line– Nixon, Carter & Clinton all tried, and failed. In that time, insurance premiums for families and businesses have only skyrocketed. We must act now to reform the system. This bill is certainly not perfect. I’ve gone on the record with my preference for the bipartisan Wyden-Bennett Healthy Americans Act. Unfortunately, that bill did not receive the support needed to move forward. Yet still, the current legislation has a number of things to be pleased about– ending discrimination based on pre-existing conditions, creating insurance exchanges, and, most importantly, a lot of experiments and pilot programs to work on cutting costs. This bill isn’t perfect, but given that inaction will bankrupt America, close more American businesses, and continue to devastate American families already in crisis– we must act now to do what we can.

One of my favorite Senators, Michael Bennet (Colorado), has an absolutely phenomenal proposal to reform Washington. I wholeheartedly endorse it. Here’s a link. We have so many challenges to face as a country. Yet, as an institution, the legislative branch has lost the faith of the American people. We need to take strong action to prove to the American people that it can function and serve us once again.

The highlights:

Salaries, Spending, and Perk
Freeze congressional member pay until there are 4 quarters of job growth
Freeze congressional office budgets until there are 4 quarters of job growth
End the health care subsidy for Members of Congress until health care reform passes and eliminates discrimination based on pre-existing conditions, doesn’t cut guaranteed Medicare benefits, increases coverage, and is fully paid for
Require full payment for the seat and disclose of those traveling with a Member of Congress on a charter jet

Lobbying Reform
Put a lifetime ban on Members of Congress becoming lobbyists
Ban congressional staff from lobbying their former boss for 6 years
Ban former committee staff from lobbying their former boss or any member of the committee who was active during their time on staff for 6 years
Ban lobbyists from joining congressional staff or committee staff for 6 years
Create stricter rules for lobbyist registration
Institute penalties for failing to register as a lobbyist

Earmark Reform
Ban earmarks to private, for-profit companies and institutions.
Make earmarks transparent
Members of Congress must report all earmark requests they receive and all earmarks requests made
Earmarks.gov should list all earmarks requests, sortable by member of Congress
Hold Members of Congress accountable on earmark requests
All earmark requests above $1 million should go before the Appropriations Committee
Hold earmarks recipients accountable
Each year, a certain percent of all earmarks will be audited to ensure that taxpayer money is being spent wisely. These reports should be made public on earmkarks.gov

Reform the Floor
Eliminate anonymous holds
Require holds to be bipartisan. If not, the hold expires in 2 days. Even bi-partisan holds expire in 30 days.
Reform the filibuster in the Senate
After 3rd failed cloture vote, the minority must find a member of the opposite party or the threshold raises to 45 votes.
After the 3rd cloture vote, if the majority finds support from three members of the minority, it raises to 45 votes.
End the filibuster for motion to proceed
Require 41 Senators to show up to vote in order to block cloture, or else it’s invoked

Campaign Finance Reform
Support the Schumer/Van Hollen campaign finance bill, which would require Chief Executive Officers to stand by their ads, quick disclosure and sunshine rules, restrictions on foreign corporations and TARP recipients, and codifying coordination rules.
Support a constitutional amendment allowing Congress to regulate contributions and expenditures.

Evan Bayh, senator from Indiana, recently announced he would not seek reelection. Apparently this has freed him to now say what he thinks and potentially become an extraordinary senator in his remaining 11 months. I suspect if he continues to not demonize and instead speak out with common sense against the obstructionist and harmful policies that plague our government he will be celebrated.

This is a link to an editorial where Sen. Bayh talks about the corrosive impact of excessive partisanship and campaign finances along with obstructionist Senate traditions that have been abused. I highly recommend you give it a read.

Among the key points that I wholeheartedly agree:

- Congressman should make a far larger effort to spend time together instead of just demonizing each other. We should demand this from those asking for our votes as well.
- Inch towards comprehensive campaign finance reform (I’ve mentioned in the past)
- Modifying the filibuster to prevent it’s rampant abuse to obstruct the basics of government

The challenges we face today are great. However if those steering the ship are not even having civil, constructive discussions it is difficult to even begin the work needed to get our country back on track.

We, the people, are losing our democracy. I’ve covered the recent Citizens United campaign finance ruling previously here. I want to talk a little bit more about why this is so important and what we need to do going forward.

The most common question I hear is something close to “Why doesn’t government work?” This is a blanket question for a frustration with politicians, broken campaign promises, the economy, our debt levels, current wars, and probably a dozen other things. We see so many things wrong– things that could be done better or that just don’t make sense, and it’s not evident why we can’t fix them immediately.

I believe that a major reason we have ended up in such a troubling spot as a nation is because of our inability to confront our challenges head on, and have honest debates about them. There are wide swaths of topics that are considered the “third rail” of politics, meaning that to even broach them risks political suicide. Health care has long been one such topic and it is increasingly clear why.

Why are major topics and subjects off limits? I’ll cite three quick reasons:
1) Partisan politics. One side will demonize the other by exaggerating positions and making hard choices. (gasp!)
2) Money. Politicians are afraid to offend the very people they depend on to fund their campaigns.
3) Getting smeared. Politicians are afraid that the interest group with something to lose will wage a nasty PR battle that could end up hurting their career and even losing their seat.

#1 is pretty simple. Most big problems require some kind of sacrifice or hard tradeoff and the party taking initiative can be made demonized for even bringing up the subject. This is just playing politics.

#2 is widely understood. Most politicians depend on money from the very special interests they hold legislative power over to win re-election. It’s no shocker then that we’re in the current sorry state that we’re in. The recent Court ruling only widens the role and influence that money plays in elections.

#3 prevents major topics from ever coming up. They will use their full force of advertising, lobbying, and media connections to destroy anyone who dares to threaten their cash cows. As the years go by, there are more and more of these special interests who have a lot to lose with a change of the status quo and they are willing to fight to preserve it.

For now let’s focus on #2. There is a current bipartisan bill in Congress from Durbin, Specter, Larson, and Jones that would help this problem. It seeks to provide an alternative financing of congressional elections. It provides a new directions for candidates to go in (voluntary) that would allow them to raise small dollar donations (up to $100) that are matched 4:1 once a candidate proves his viability by clearing a certain level. This decreases the influence of special interests (PAC’s, etc) and allows candidates to spend more time with ordinary constituents. This is obviously not a magical pill that will solve all our problems, but it is a step in the right direction. We are still left to fight political cowardice and opportunism along with the problem of special interests who will seek to manipulate public opinion to their ends. But this would be a good start.

Why can’t we get anything done? Well extreme partisanship is certainly one of the reasons. News that a “hold” has been placed on 70 of the President’s nominees is certainly disappointing.

Even more so when you note that the same Senator issued this in a press release in 2005:

As a U.S. Senator, I believe that the review of judicial nominations is one of the most important responsibilities of the Senate, and I firmly believe that each of the President’s nominees should be afforded a straight up-or-down vote. I do not think that any of us want to operate in an environment where federal judicial nominees must receive 60 votes in order to be confirmed. To that end I firmly support changing the Senate rules to require that a simple majority be necessary to confirm all judicial nominees, thus ending the continuous filibuster of them.

The best part is that the Senator is apparently holding out for billions *more* in pork for Alabama. He took a play out of his Nebraska colleague’s playbook and then seemed to multiply the dollar amounts by a few factors. Wow.

Say what you will, but this speaks volumes for their belief in their American people’s ability to get punched in the face and take it.

“There will be no change, until we change Congress.”

Lawrence Lessig who I’ve posted about previously, just released an amazing article about the ills of Washington. I agree with much, if not all of it. The very fundamentals of our democracy are in danger and as our problems mount and our inability to address them is as loud an indictment that exists. Why? Read on.

This is an absolute must read. It is long, but well worth it.

Here are some of the standout quotes:

“The source of America’s cynicism is not hard to find. Americans despise the inauthentic. Gregory House, of the eponymous TV medical drama, is a hero not because he is nice (he isn’t) but because he is true. Tiger Woods is a disappointment not because he is evil (he isn’t) but because he proved false. We may want peace and prosperity, but most would settle for simple integrity. Yet the single attribute least attributed to Congress, at least in the minds of the vast majority of Americans, is just that: integrity. And this is because most believe our Congress is a simple pretense. That rather than being, as our framers promised, an institution “dependent on the People,” the institution has developed a pathological dependence on campaign cash. The US Congress has become the Fundraising Congress. And it answers–as Republican and Democratic presidents alike have discovered–not to the People, and not even to the president, but increasingly to the relatively small mix of interests that fund the key races that determine which party will be in power.”
…
This corruption is not hidden. On the contrary, it is in plain sight, with its practices simply more and more brazen. Consider, for example, the story Robert Kaiser tells in his fantastic book So Damn Much Money, about Senator John Stennis, who served for forty-one years until his retirement in 1989. Stennis, no choirboy himself, was asked by a colleague to host a fundraiser for military contractors while he was chair of the Armed Services Committee. “Would that be proper?” Stennis asked. “I hold life and death over those companies. I don’t think it would be proper for me to take money from them.”
…
“Is such a norm even imaginable in DC today? Compare Stennis with Max Baucus, who has gladly opened his campaign chest to $3.3 million in contributions from the healthcare and insurance industries since 2005, a time when he has controlled healthcare in the Senate. Or Senators Lieberman, Bayh and Nelson, who took millions from insurance and healthcare interests and then opposed the (in their states) popular public option for healthcare. Or any number of Blue Dog Democrats in the House who did the same, including, most prominently, Alabama’s Mike Ross. Or Republican John Campbell, a California landlord who in 2008 received (as ethics reports indicate) between $600,000 and $6 million in rent from used car dealers, who successfully inserted an amendment into the Consumer Financial Protection Agency Act to exempt car dealers from financing rules to protect consumers. Or Democrats Melissa Bean and Walter Minnick, who took top-dollar contributions from the financial services sector and then opposed stronger oversight of financial regulations.

The list is endless; the practice open and notorious. Since the time of Rome, historians have taught that while corruption is a part of every society, the only truly dangerous corruption comes when the society has lost any sense of shame. Washington has lost its sense of shame.”
…
“…there’s all the difference in the world between a lawyer making an argument to a jury and a lawyer handing out $100 bills to the jurors. That line is lost on the profession today. The profession would earn enormous credibility if it worked to restore it.”
…
“Drug companies fund members, for example, to stop reforms that might actually test whether “me too” drugs are worth the money they cost. But the reforms get stopped by being framed as debates about “death panels” or “denying doctor choice” rather than the simple argument of cost-effectiveness that motivates the original reform. A very effective campaign succeeds in obscuring the source of conflict over major issues of reform with the pretense that it is ideology rather than campaign cash that divides us.”
…
“Imagine an alcoholic. He may be losing his family, his job and his liver. These are all serious problems. Indeed, they are among the worst problems anyone could face. But what we all understand about the dependency of alcoholism is that however awful these problems, the alcoholic cannot begin to solve them until he solves his first problem–alcoholism.

So too is it with our democracy. Whether on the left or the right, there is an endless list of critical problems that each side believes important. The Reagan right wants less government and a simpler tax system. The progressive left wants better healthcare and a stop to global warming. Each side views these issues as critical, either to the nation (the right) or to the globe (the left). But what both sides must come to see is that the reform of neither is possible until we solve our first problem first–the dependency of the Fundraising Congress.”
…

If not now, how much more will it take? When will we say enough is enough and demand representatives that answer to us and not special interests?

It looks like the only thing Congress might be able to get done any time soon will be some kind of financial reform. In an election year, it will be really interesting to see who has the gall to side with big banks (despite being the biggest contributor in Washington) over reigning reckless risk-taking. The WSJ’s headline of Banks Gear up for a Battle, unfortunately, says it all. The good news? I’m more hopeful we’ll get some real protections in place than I have been for months. I guess we just have to stay tuned…

This article in the Washington Post certainly seems like an example of banks wanting to have their cake and eat it too. Here’s the choice part:

Currently, they can choose between direct lending and a federal program that guarantees student loans made by private banks. The bill would not affect nonfederal loans.

By cutting banks out of the equation, the administration expects to reap $80 billion over the next decade for increased student aid, community colleges, early childhood education and other programs. Those funding estimates, however, are being questioned because they are several months old.

Prominent players in the lending industry, including Sallie Mae, oppose the legislation, saying that it will eliminate thousands of jobs and that there are ways to save the government money without shutting out private lenders. Republicans depict themselves as defenders of market competition.

Hmm…the banks don’t want the government to pull their guarantee of this debt, but just want to make all the profit. And, naturally, they’re worried about being cut out of the process entirely. Hmm…I’m not feeling too sympathetic. Try not to throw up as you read about Sallie Mae here.