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GOP Gets Its Way in House-Senate Budget Deal
by John M. Curtis
(310) 204-8700
Copyright
December 12, 2014
All Rights Reserved.
Passing a $1.1
trillion spending plan, the House of Representative narrowly got a new budget
219-206 over objections of liberals led by former House Speaker Nancy Pelosi
(D-Calif.). Pelosi and Sen.
Majority Leader Harry Reid (D-Nev.) ran out of political capital Nov. 4 when
Democrats lost nine seats in the U.S. Senate and 14 seats in the House, giving
Republicans decisive majorities in both House of Congress. Despite Democrats shellacking Nov.
4, House Speaker John Boehner (R-Ohio) and incoming Senate Majority Leader Mitch
McConnell committed to no more government shutdowns, pressuring the GOP to
compromise with Democrats on the GOP-dominated spending plan. Democrats, led by Pelosi and Sen.
Elizabeth Warren (D-Mass.), object to the spending plan that relaxed provisions
of Dodd-Frank, allowing more derivative trading and higher campaign limits.
Showing she’s up for the fight, Pelosi blustered but in the end signed on
to the $1.1 trillion plan, designed to reform the pension system, promising to
stop bankruptcy otherwise solvent U.S. corporations in the future. “We have enough votes to show them
never to do this again,” said Pelosi, lacking backing from the White House
throwing support to the GOP-backed
spending plan. Objections to the
increase in individual donations to political parties at $777,600, Democrats
eventually caved in, realizing they lacked the votes. White House officials led by Office
of Management and Budget Director Shaun Donovan backed the GOP plan over Pelosi. Whether admitted to or not, the
White House has little patience left for Pelosi, whose priorities for national
health care damaged Obama’s legislative agenda—indeed legacy—leading to his
unfavorable approval ratings.
Pelsoi objected to provisions in the spending plan that loosened banks’
regulations on derivative trading, supported by President Barack Obama and JP
Morgan CEO Jamie Dimon. “It’s a
very, very strange that the two of them would be working to support the bill,”
said Rep. Maxine Waters (D-Calif.), ranking Democrat on the House Financial
Services Committee. While
conservatives object to Obama’s executive action on immigration stopping
deportations, the spending plan doesn’t stop it.
Pairing back certain provisions to Dodd-Frank doesn’t begin to reinstate
key elements of 1933 Glass-Steagall Act that prevented banks after the 1929
stock market crash from engaging in stock market trading. When former President Bill Clinton
signed Gramm, Leach Bliley into law Nov. 11, 1999, it reversed many of
Glass-Steagall’s safeguards, preventing banks from risky trading.
Signing Dodd-Frank into law July 21, 2010 in the wake of the nation’s
biggest meltdown since the Great Depression, Obama hoped to restore at least
some of Glass-Steagall’s financial safety net.
With so many banks today hopelessly dependent on derivative trading,
especially in mortgage-backed securities packaged by mortgage giants Fannie Mae
and Freddie Mac, the nation’s biggest banks continue trading credit default
swaps or risk losing big revenues.
Republicans hoped to wait until after funding runs out Feb. 27 for the Dept. of
Homeland Security to pull the funding on Obama’s actions on immigration. Over Pelosi’s objections, Obama
joined forces with Boehner to get a compromise spending plan, avoiding the
unthinkable again of shutting down the government. With the stock market showing signs
of disintegrating, the economy couldn’t take another shutdown.
Now in the U.S. Senate,
Reid promised to work out the kinks with Sen. Tom Coburn (R-Okla.), whose
concerns about wording on federal lands could delay final passage. Voting on a stopgap funding bill
Thursday night, the Senate hoped for a final vote before the government shuts
down Saturday night. “We’ll take up
the long-term spending bill tomorrow,” said Reid, referring to the omnibus bill
that funds the government through 2015.
Conservative like Coburn have all the work cut out for them convincing
fellow conservatives like Sen. Ted Cruz (R-Fl.), Sen. Rand Paul, Sen. Marco
Rubio (R-Fl.), all looking to de-fund Obama’s amnesty. GOP officials walk a tightrope
de-funding Obama’s halt to deportations without alienating the nation’s Latino
community. House and Senate
Democrats and Republicans all have pressure to complete a workable spending
tomorrow.
Racing against the clock, House and Senate conferees look to compromise
on the whopping $1.1 trillion budget, holding spending flat, except funding the
Mideast war against ISIS and African Ebola outbreak. Reid’s final act as Majority Leader hopes to cobble together a compromise spending bill
that keeps the government running through 2015.
When Homeland Security funding runs out Feb. 27, the new GOP-dominated
Senate will have a chance to de-fund Obama’s unilateral amnesty plan. Backing the spending plan, Obama’s
already conceded his largely symbolic—and political—backing of the budget
compromise, executive action on immigration is likely to fail next year. Other that policy wonks like
Elizabeth Warren, weakening Dodd-Frank isn’t considered a deal-breaker. Reid’s final act a Majority Leader
essentially kicks the economic can down the road.
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