House Republicans, in their much-ballyhooed “Pledge to America,” suggested immediately cutting $100 billion from the non-defense discretionary portion federal budget, which would require a 21 percent reduction in, among other things, federal education funding. But Mike Lee, the Republican nominee for the Senate in Utah, has doubled down on the House GOP’s idea, saying that he would like to see an immediate 40 percent reduction in the federal budget, adding that he’s willing to see the government shut down if President Obama refuses to accede to such draconian cuts:

Lee said he’d “call their bluff” by first passing the tax cuts and forcing President Obama to sign them or veto them. Then, pass a balanced budget, which “would require about a 40 percent cut,” and force Obama to either sign it or shutdown the government. The prospect of such a showdown between Obama and Republicans, in fact, made Lee “giddy.” When asked about it Friday afternoon, Lee said that Thursday night was the first time he’d used the 40 percent figure.

What would this mean in practical terms, particularly in light of Lee’s previous decision to rule Social Security and the defense budget as out of bounds for cuts? As Newsweek’s Andrew Romano put it, “the math is simple–and bleak“:

In Obama’s budget, Social Security costs $787.6 billion; defense costs $928.5 billion; debt payments cost $250.7 billion. Together they total $1.967 trillion. If you remove that $1.967 trillion from the equation–as Lee suggests–you’re left with $1.863 trillion in spending to work with. At this point, balancing the budget–i.e., wringing $1.669 trillion in savings out of that last $1.863 trillion–would require slashing every government program that’s not defense or Social Security (Medicare, Medicaid, veterans affairs, education, and so on) by 89.6 percent.

Republican candidates like Lee and Marco Rubio (FL) like to act as if reducing the federal budget is a simple task that involves rooting out waste, fraud, and eliminating programs that nobody likes. But Lee’s plan would involve a nearly 90 percent reduction in the health care entitlements, education funding, and other discretionary programs like federal highway funding, Immigration and Customs Enforcement, and the Food Safety and Inspection Service.

Are such reductions practical or economically advisable? Of course not. But Lee’s willing to stoke the Tea Party into a frenzy with his talk of balanced budgets and a government shutdown.

Republicans on the House Financial Services Committee have already made it quite clear that they intend to attempt to defund the newly created Consumer Financial Protection Bureau if the GOP gains control of the lower chamber. Rep. Jeb Hensarling (R-TX), one of the top Republicans on the committee, has explicitly announced his intention to defund the agency, as he believes it “assaults the liberties of the consumer.”

But denying the CFPB funds may not be the only way in which Republicans look to kneecap the new agency. Rep. Ed Royce (R-TX), who has been floated as a possible challenger to Rep. Spencer Bachus (R-AL) for the Financial Services chairmanship, told American Banker that he also wants to give bank regulators direct veto power over the CFPB’s rulemaking:

“If the Consumer Financial Protection Bureau can trump the safety and soundness regulator, you run the risk of creating the same type of environment that was created with the government-sponsored enterprises in which you created moral hazard in the system,” he said. “We need to address giving the regulators for safety and soundness the ability to trump the actions on consumer protection if they threaten safety and soundness. Safety and soundness has to be our fundamental concern.“

This “safety and soundness” talking point was constantly employed by Republicans during the debate over financial regulatory reform, showing that they care more about a bank’s ability to make a profit than the government’s responsibility to protect consumers from financial shenanigans. And Royce is evidently not ready to give it up.

But the CFPB is already subject to veto by the bank regulators. A two-thirds vote of the Financial Stability Oversight Council — a nine member board composed of the heads of the bank regulators, the Treasury Secretary, and an “insurance expert” — can nullify any CFPB regulation.

Is Royce suggesting that the individual bank regulators have veto power over rules that affect the insitutions that they regulate? If so, such a move would be incredibly destructive, as those agencies have already shown that they are easily co-opted by the firms they oversee. The entire point of creating the CFPB was to level the playing field a bit between the banks and consumers. Giving the bank regulators a straight veto would effectively put the consumer protection system right back where it was before the Dodd-Frank financial reform bill passed.

In an interview with National Journal, CFPB head Elizabeth Warren said that the agency will be bolstered by crowd-sourcing, collecting stories from the public’s interactions with the financial system. Evidently Royce wants the crowd to be composed solely of bankers.

When Congress tackled financial regulatory reform, Sen. Bob Corker (R-TN) said that he was going to play a productive role, negotiating with Senate Banking Committee Chairman Chris Dodd (D-CT) after the committee’s ranking member, Sen. Richard Shelby (R-AL), made it clear that he wasn’t interested in cutting a deal.

However, Corker ended up playing the role that the Gang of Six played during the health care reform debate: insisting that his ideas get placed into the bill, and then voting against it anyway, while decrying the breakdown of bipartisanship.

According to the Nashville Business Journal, Corker is looking ahead to his next performance — playing a “leading role” in the inevitable reform of mortgage lending and the government sponsored enterprises Fannie Mae and Freddie Mac:

U.S. Sen. Bob Corker, a Republican, led a forum on the U.S. housing market Tuesday, making clear his intentions to again try shaping legislation in reaction to the financial crisis…“I think this is a much heavier lift for Congress than what we saw during Dodd-Frank,” he said of the bill overhauling the financial system, which he ultimately opposed.

Corker’s intentions are distressing enough after seeing the role that he played during the financial reform debate. But considering Corker’s position on mortgage finance reform, they’re even worse.

When Dodd-Frank was being hashed out on the Senate floor, Sen. John McCain (R-AZ) offered a truly irresponsible amendment that would have simply set a date certain for dissolving Fannie Mae and Freddie Mac, despite the fact that the mortgage giants back more than 90 percent of mortgages in the country. “The McCain amendment would cause significant uncertainty among the investors in GSE-issued mortgage-backed securities, threatening the primary source of mortgage credit we have at this time, without offering any alternative sources of liquidity,” we here at CAP noted at the time. “Such a large drop in mortgage liquidity could strongly threaten the prospects of economic recovery.”

McCain’s plan would have not only threatened America’s economy, but macroeconomic stability, as “investor appetite for the MBS issued by Fannie Mae and Freddie Mac helps to finance the significant borrowing of overseas’ capital by the U.S. government.” The amendment was an ideologically driven catastrophe waiting to happen.

Corker was a co-sponsor of that amendment and voted for it, saying later that it was a “really thoughful amendment.” And now he’s looking for a way to be even more involved in the process the next time around.

One of the more legitimate criticisms of the Dodd-Frank financial regulatory reform bill that was signed into law by President Obama earlier this year is that it leaves too much discretion to regulators for crafting rules that will govern Wall Street’s activities. Not only does placing so much responsibility in the hands of regulators give the financial services industry ample opportunity to lobby for weaker restrictions, but it is also a time-consuming process.

And according to Reuters, the drawn out rule-writing process may provide an opening for House Republicans to blunt the effects of Dodd-Frank should they win control of the House:

If Republicans can gain control of key House committees, their chairmen could throw so many time-consuming subpoenas, hearings and information requests at regulators that rule-writing for Dodd-Frank would slow down. The Commodity Futures Trading Commission (CFTC), a small agency with a lot on its plate, could be vulnerable to this, as could the [Consumer Financial Protection Bureau], still in its infancy.

House Republicans have already made it quite clear that they would repeal Dodd-Frank if they could, and at the very least they’d like to see the newly created Consumer Financial Protection Bureau defunded. But bogging down the regulatory agencies in an avalanche of paperwork and hearing appearances is an obvious avenue for preventing Dodd-Frank’s rules from coming online, should the repeal effort fall flat (which it likely will, as President Obama would almost surely veto any repeal, even if it got through both houses of Congress).

Such a move could have a big effect, as the rule-writing process is gaining importance. Bloomberg noted today that Wall Street banks are already exploiting vagueness in the Dodd-Frank law to continue proprietary trading — trading for their own account — which the law is meant to restrict:

The banks have no intention of ceasing their prop trading. They are merely disguising the activity, by giving it some other name. A former employee of JPMorgan, for instance, wrote to say that the unit he recently worked for, called the Chief Investment Office, advertised itself largely as a hedging operation but was in fact making massive bets with JPMorgan’s capital. And it would of course continue to do so. [...] It falls to the comptroller general – - or, more specifically, the General Accountability Office, which is overseen by the comptroller general — to determine precisely what the phrase [restricting such trading] means. And, at the moment, the GAO pretty clearly hasn’t the first clue.

In a sign of potential things to come, Rep. Spencer Bachus (R-AL), who is slated to take over the House Financial Services Committee if the Republicans gain a majority, has already been begging the banks for donations, on the premise that the GOP believes financial reform was too tough.