Last year, the House passed a strong financial reform bill without a single Republican vote. Obama has signaled his support for a similarly forceful approach in the Senate.
It was initially unclear whether Senate Democrats would fall in line with Obama and pursue an equally strong bill or offer a weaker proposal in an effort to win more Republican votes.
It now looks as though they are aiming to push a stronger bill. This could prove a win-win-win scenario for Democrats. It could lead to significant political and policy gains, judging by recent polls.
Politically speaking, Democrats should relish a debate over Wall Street reform.
Democrats remain in a dangerous position heading into November. Their deteriorating position is driven almost entirely by a drop in their standing — not by any improvement for the Republicans.
A lot of the slippage has to do with public worries about spending and government, along with continuing economic struggles.
But it is exacerbated by the voters’ view that Democrats have put Wall Street’s interests ahead of their own.
For example, almost 48 percent of voters said “government’s policies to deal with the economic recession” helped big banks a lot, according to an Economic Policy Institute survey, conducted late last year by Peter Hart, a Democratic pollster.
Just 3 percent agreed that government’s policies helped “the average working person” or “you and your family.”
Our own recent poll for Democracy Corps found that a 46 percent plurality of voters think Obama and Democrats put bailing out Wall Street ahead of creating jobs for ordinary Americans.
A high-profile Senate debate about Wall Street reform could help reverse this. The political benefits could be even broader, according to a bipartisan survey by Pew Trust last month.
It revealed that voters want action that holds banks accountable.
Indeed, 42 percent said “making big Wall Street banks repay the bailout money they received” was “one of the most important things for Congress and the president to work on.” In a list of eight possible priorities, only “creating jobs” (43 percent) was higher.
The House bill includes an amendment that requires the banks to repay Troubled Asset Relief Program funds.
More important, two different Democratic arguments in favor of reform each would crush a Republican argument straight out of GOP pollster Frank Luntz’s playbook by at least 35 points.
It looks politically smart for Senate Democrats to include a similar provision.
In fact, a robust debate about Wall Street reform would have multiple political benefits for Democrats.
Our polling reveals that pro-reform messages generate intense responses among Democratic voters while also appealing to independents.
After hearing arguments for and against a strong reform bill (with the Republican argument again including Luntz’s talking points about a “permanent bailout”), 64 percent of voters favored reform, according to recent national survey of 1000 registered voters that we conducted with YouGov.com.
Fully 90 percent of Democrats backed the measure, including 55 percent who did so strongly, while independents favored reform by a solid 55 to 45 percent margin. Even 39 percent of Republicans supported the bill.
Perhaps most important, strong reform puts Republicans in a terrible position — forcing them to give in and hand Obama another victory, or to side with Wall Street banks and their lobbyists, whom the public loathes. Seventy-three percent of independents rated big banks unfavorably in a January poll of frontline Democratic and open-seat congressional districts conducted by Lake Research Partners for Accountable America.
As Senate Minority Leader Mitch McConnell’s attack on Wall Street reform shows, Republican leaders may well choose the latter tack — allowing Democrats across the country to put this Roll Call headline from December in their ads: “Republicans Huddle With Lobbyists to Kill Financial Reform Bill.”
Considering the intense political pressures on and the fissures within the Republican Party, Democrats would very likely be able to pick off a few moderate Republicans to pass the bill.
In fact, in a recent National Journal poll, 71 percent of Republican “insiders” said it was in their party’s interest to work with Democrats on this. “If Republicans stand with Wall Street,” one GOP insider said, “we’ll get creamed for it.”
This leads us to the second Democratic “win” — a major legislative victory that Democrats can tout as bipartisan progress. It is sure to help reduce voter anger over Washington gridlock.
The final “win” is the most important: A strong bill is desperately needed to rein in the excesses of Wall Street, hold the big banks accountable, prevent future financial crises and bailouts and protect consumers from deceptive practices.
To think that the greatest economic collapse in three-quarters of a century would result in no serious changes to the flawed financial system that created it is hard to imagine.
Michael Bocian, a principal at Greenberg Quinlan Rosner, provides strategic advice to progressive political and issue campaigns. Andrew Baumann is a senior associate at Greenberg Quinlan Rosner.