I think a lot of the political problems the Obama administration is dealing with come down to the fact that they’ve largely been concerned with legislative efforts that are “too big to fail.” Which is to say that when it comes to subjects like economic stimulus, comprehensive health reform, or clean energy it’s just not credible—politically, practically, or morally—for the White House to walk away if it falls a vote or two short of what it really wants. There’s no real choice but to give in and compromise. The results of something like that, however, are demoralizing to the administration’s natural constituency without endearing it to people who dislike the president.
What’s needed to regain footing, I think, is a different kind of issue. An issue where it makes sense to draw lines, pick a fight, and if the votes aren’t there to pass a strong bill just say to the public “we were out there fighting for you and senators x, y, and z killed it.” Swinging for the fences like that, you might actually hit a home run, which would be great. And if not, you energize your allies and make your enemies look bad. At least if you pick the right issue.
Financial regulation, it seems to me, would be that issue. In broad terms, the idea of regulating big banks is popular. And substantively speaking, a weak bill that’s full of loopholes would genuinely do very little good. We’re not in imminent danger of a bubble/crash replay but if we do something called “financial regulatory reform” we’re unlikely to do it again until there is a new panic. So there’s a strong case for coming out swinging against denouncing a too-weak bill as a sham and drawing some bright lines. If it doesn’t happen, I’ll do some Taibbi-style denunciations of Geithner & Rahm.