Despite fierce opposition from both the left and the right, the “Cromnibus” (a portmanteau of “continuing resolution” and “omnibus”) spending bill passed the House last night, averting a government shutdown by mere hours:
Thanks in part to a rare alliance between President Barack Obama and Speaker John Boehner, the House voted Thursday to pass a $1.1 trillion spending bill to fund the government, clearing a hurdle to avoid an otherwise imminent government shutdown. The House also passed a measure that will fund the government for two additional days in order to give the Senate time to approve the legislation before the government runs out of funding on Friday, according to NBC News.
At the eleventh hour, Obama and Boehner scrambled to salvage the bill – which passed by a vote of 219 to 206 – amid a Republican revolt over immigration and a Democratic revolt over provisions that would deregulate Wall Street and increase the amount that individual donors can contribute to national political party committees.
Ben Jacobs outlines what the respective revolts were all about:
The pill that Democrats had trouble swallowing was a provision rolling back Dodd-Frank that would allow major banks to carry out certain risky derivatives trades through funds insured by the FDIC.
The idea of weakening financial reform only years after a financial crisis that almost brought down the American economy alarmed many Democrats. … The opponents in the GOP caucus were the usual conservative suspects, upset about the fact that the bill did not defund Obama’s executive order on undocumented immigrants.
Republicans were also less than thrilled that the bill didn’t slash funding for Obamacare. The Democratic revolt was led by the party’s liberal populist wing, with Nancy Pelosi leading the pack and Senator Elizabeth Warren urging them on. Tim Fernholz has the details on what liberal Dems found so irksome about the Dodd-Frank rule change:
The big financial firms that dominate the swaps markets were particularly unhappy with rules preventing them from holding or trading derivatives within their federally insured bank subsidiaries—where they typically have an advantage. (That’s because the prospect of government bailouts arguably affords the bank subsidiaries higher credit ratings, which comes in handy when you’re playing in the swaps market.)
Facing the prospect of having their derivatives activities “pushed out” to subsidiaries unprotected by federal deposit insurance, the big banks pushed back. During the drafting of Dodd-Frank, they succeeded in keeping some categories of swaps in-house, including foreign-exchange, gold, silver, and interest-rate swaps. But the banks earned a bigger victory in 2013 by getting the Republican-controlled House of Representatives to pass a bill essentially written by Citigroup lobbyists to create large exemptions in the rule. It turns out the same language was slipped into the current spending bill[.]
Matt O’Brien weighs in:
This actually isn’t that big a deal, but the principle is. Think about it this way. If insured banks can’t make these bets, then uninsured ones will—and we’d still have to bail them out if they threaten to bring down the whole financial system. But as long as we’re talking about run-of-the-mill, and not end-of-the-world, losses, then we, as taxpayers, should clearly prefer for these swaps to happen in the uninsured banks. That way, we don’t have to foot the, admittedly small, bill. And this isn’t really a debate. There’s no real counterargument that I’m aware of why it’d be better for the mega-banks to be allowed to take more risks with taxpayer-insured money (other than it’d be good for their bonuses).
Sarah Binder questions whether the drama was worth it for the Democrats:
My hunch is that Pelosi is too smart a politician and knows her caucus too well to have been surprised by the outcome. True to form, Pelosi provided cover for Democrats seeking to show their anti-Wall Street bona fides, yet managed not to derail a bipartisan deal (that was bound to be better for Democratic priorities than kicking the can into the new Congress with a 2-3 month stop gap spending bill).
Did Warren’s gambit put the liberal wing on stronger footing in the coming Congress? I’m skeptical. Warren clearly put Democratic party leaders and her colleagues on notice that she will continue to oppose measures that unduly advantage Wall Street interests. But unless she can secure stronger backing from the White House (and her colleagues), I suspect that the liberal wing of the Democratic party will face a tough road ahead in a Republican-led Congress.
But Cillizza thinks Pelosi got her point across:
Pelosi — and Massachusetts Sen. Elizabeth Warren, who spoke out forcefully against it too — lost the battle on the spending bill. But, they may have won the wider war — or at least scored a tactical victory that puts her and the party’s liberal wing in a stronger position come the 114th Congress.
What Pelosi’s revolt made clear is that while there will be more Republicans in the House and Senate come January, nothing can get done (or at least nothing can get done easily) without some portion of liberal Democrats on board. This was a warning to the White House and Senate Democrats not to cut Pelosi out or take her (or her liberal Democratic allies) for granted going forward. Point made.
Drum is relieved that bipartisanship worked in the end – albeit in its typical, clunky way:
This is one of those things that demonstrates the chasm between political activists and analysts on the one side, and working politicians on the other. If you take a look at the bill, it does indeed have a bunch of objectionable features. People like me, with nothing really at stake, can bitch and moan about them endlessly. But you know what? For all the interminable whining we do about the death of bipartisanship in Washington, this is what bipartisanship looks like. It always has. It’s messy, it’s ugly, and it’s petty. Little favors get inserted into bills to win votes. Other favors get inserted as payback for the initial favors. Special interests get stroked. Party whips get a workout.
That’s politics. The fact that it’s happening right now is, in a weird sense, actually good news. It means that, for a few days at least, politics is working normally again.