Think it Through

from Bjorn J via Creative Commons

These days, the tail that wags the dog in Congress is colored blue.

The so-called Blue Dog Democrats are not a majority of the House of Representatives. They are not even a majority of the Democrats. But they are tugging so hard on the reins of the majority that they are determining the direction of heath care reform.

Think of the 52 Democrats in the House of Representatives who call themselves Blue Dogs as Darwinian creatures of politics – descendants of a pest called the boll weevil that infested Congress in the 1980’s.

Russonello’s political dictionary defines a “Blue Dog” as: “a congressional animal that barks incessantly about saving the taxpayers money while quietly carrying water for policies that increase the federal deficit and the national debt.”

The most important thing to Blue Dogs – about half of them come from Southern states – is presenting themselves to their local news media and their constituents as fiscal conservatives in order to send the message that they are a different kind of Democrat – code for not too liberal.

The Blue Dogs feed on a special brand of “fiscal conservatism,” which claims to spend less of taxpayers’ money but in reality merely shifts what the government’s money is spent on and who pays. Their ancestors, the boll weevils, worked against any spending in the 1980s that was not a weapons system.

They had a large impact on government and our country:

By the end of Ronald Reagan’s second term in office in 1988, spending on domestic needs such as health care; child nutrition; economic programs to help create jobs, build housing and educate our children; medical and scientific research; and everything else except entitlements and defense, dropped from 20.1% to 14.8% of the federal budget. Congress, with the boll weevils leading the way, found the money to increase military spending from $158 billion in 1981 to $291 billion in 1988, and spending on the military rose from 23.3% to 27.3% as a proportion of the federal budget. These fiscal conservatives were responsible for the budget deficit increasing from $79 billion to $155 billion during the Reagan years (1981 to 1988).

Taxes on the wealthiest Americans dropped to their lowest rate in decades (from a top marginal rate of 69.125% to 28%). The interest on the federal debt reached $12.65 billion every month.

Today, the Blue Dogs have health care reform by the neck. They intone ominously about their fears of a high price tag on President Obama’s plan for comprehensive health care. Then they oppose provisions that will save money for health care consumers and for the federal government. Specifically, they oppose a strong public option because it would be too difficult for private insurance companies to compete against – in other words it would provide quality care at less cost. They are also willing to draw a line in the sand to block health care reform if it includes new taxes on businesses or millionaires.

They dubbed President Obama’s stimulus package as “too costly,” but gave President Bush an open check book to wage war in Iraq. Their reasoning seems to be that many of them came from traditionally Republican districts, so they need to act like Republicans.

If the President loses meaningful health care reform because of the Blue Dogs, he has his chief of staff to blame. Many of the current Blue Dogs were recruited by Rahm Emanuel when he served as chairman of the House Democratic Congressional Campaign Committee. He believes they are the key to the Democrats holding the majority in the House because only the pro-insurance company, pro-millionaire type of Democrat can get elected in these districts.

This type of thinking is part of the reason why people tell us in focus groups that it doesn’t matter who wins elections, because “they are all the same in Washington.” Voters legitimately ask: why should we work for the Democrats to win a majority in Congress if they are not willing to make real changes from what the Republicans offered?

Nothing will test this assumption more powerfully than the outcome of health care reform.

Piece by piece, whether it is securities, antitrust, taxes, or the federal government’s willingness to help people overcome financial difficulties, President Obama is dismantling the structure of the Reagan revolution. Obama is doing this with the same intensity, scope, and support among the public that President Reagan had when he tore down much of the foundations of Roosevelt’s New Deal and Johnson’s Great Society programs.

After a weaker version of Obama’s legislation to bring back some consumer protections for credit card holders passed the House of Representatives last week, the Senate has started to consider a tougher version. Although it is far from a sure thing that they will pass anything meaningful, the fact that Congress is addressing this issue at all is revolutionary. For the past three decades Democrats and Republicans have worked at the favor of the banks and credit card companies to strip away consumer protections against predatory lenders. This played to the melody of deregulation – a tune that government began to play first under President Carter but which became so popular it was practically a national anthem under Reagan.

At the same time that Congress loosened regulations on banks and other lenders, the companies began to increase substantially their marketing efforts: Visa began telling us “It’s everwhere you want to be,” Mastercard said spending money was “priceless,” and so on. Since then, we have seen millions of Americans weighed down with debt from which they can never fully recover. No one challenged the laws because we were told that if you fall behind on your payments it was entirely your fault. You were irresponsible. It took years for people to catch on that in many cases it was the lender who was irresponsible.

In 2006, the non-profit organization Americans For Fairness in Lending, asked our firm, Belden Russonello & Stewart, to help it figure out how to educate the public about the problems with the lending laws. They wanted to tell the story of the harm caused by hidden late fees, fine print that hides outrageously high interest rates, and other chicanery that falls under the heading of predatory lending.

We conducted a number of focus groups in Chicago, and I can remember coming away surprised, saddened, and inspired by what people told us.

I was surprised because of the familiarity with predatory lending practices from the average middle class people in the focus groups. I had figured that nobody would know what I was talking about when I introduced the topic, but instead people spoke up, citing instances of people who had been hurt by zero money down for car loans that turned out to include unpayable interest, payday storefronts, credit card misrepresentations that sunk people they knew, especially college students, and mortgages where expanding rates and penalty payments were concealed. We only had to mention the topic and we heard of flood of complaints.

I was saddened because most of these people who were aware of the practices believed that there was nothing they could do about them. Their response, as we used to say in Newark, New Jersey, “whaddaya gonna do?”

Finally, I was inspired by how a little information about the history of these practices could transform their resignation into indignation and the desire to speak up and get involved to change things. When they heard that before the 1980’s we had protections against most of the consumer traps they cited, they were stunned. Why can’t we go back to more sensible rules, they asked? Three years later, their collective response has caught the ear of the Congress and the president.

How strongly the Congress remakes the credit laws will be a test of how well lawmakers have listened to these people. In a larger sense it will also test how far President Obama can take us down the path of undoing the Reagan revolution and bringing balance back to our laws.