The House passed the final version of the financial reform bill late today, but the Senate is unlikely to vote on similar legislation until after Independence Day break. From the Washington Post:

House members voted 237-192 just before 7 p.m. to approve the sweeping 2,300-page bill, which among other things would create an independent consumer bureau within the Federal Reserve to protect borrowers from lending abuses, establish oversight of the vast derivatives market and enable the government to wind down large, failing firms.

A bill should land on President Obama’s desk by mid-July, unless of course key Republicans pull back their support, as Brian Beutler at TPM points out:

There’s still a nightmare scenario for Democrats: An unforeseen reneging by one of the three Republicans who helped shape the final compromise on the legislation could leave them a vote shy. And at this point, they have few if any means of changing the legislation.

But the Democratic authors of the legislation — House Financial Services Committee Chairman Barney Frank, and Senate Banking Committee Chairman Chris Dodd — have both implied that the deal is done.

The Kagan nomination is proceeding quite predictably. With rare exceptions, the confirmation process is an opportunity for the out-party to remain relevant and to score some points among their base. It is also a chance to marvel at good governance as these often boring rituals are a great lesson in civics.

While not elevated to spectacle (yet) by the 24 hour news cycle, the GOP’s repeated criticisms of Elena Kagan for her admiration of Justice Thurgood Marshall is quite illuminating. Why? For once more Conservatives and the GOP show us who they have always been.

Do not misunderstand, I am all for spirited debate about the role of the Constitution and The Courts in American life: These conversations about the balance between freedom, order, personal rights, and State power are healthy and should be encouraged. And while I labor under no illusions that the rabble will become philosopher kings, I do hope (while not holding my breath) that the attention surrounding the nomination process sparks some reflection and civic-mindedness.

However, just as with Rand Paul’s misreading of history, Palin and McCain’s Herronvolk tinged “real American” populism, and the rise of the Tea Party Glenn Beck enabled brigands, I am always amazed at how some folks revel in being on the wrong side of history. I know that is a lot to expect, but it would be nice if one of the voices on the Right would admit that, “well, maybe, the forces of conservatism were wrong on Civil Rights and racial relations,” or that “maybe these ‘activist’ judges who fought for expanded and full rights for all Americans were onto something…”

Ultimately, the Kagan nomination process is a chance to once more hash out what The Constitution is and ought to be. No easy answers are not be found. But, there are always some big questions to be asked. To point:

Speaking for we the people or Just some people?

Democratic with anti-democratic tendencies or Anti-democratic at its heart and wrapped in a veneer of democracy?

A strong document that is immutable for all time? or A document that is strong precisely because of its ability to change?

A document that should be used to support corporate interests? or A document that should protect the people’s interests against all others?

Colorblind? or Color-conscious?

A document written by supermen who were divinely inspired? or A document written by smart people making politically pragmatic choices?

A genius document that was flawed only in its application? or An imperfect document whose genius is that it can be corrected over time?

Written by selfish men who realized that self-interest was both the problem and the solution? or A selfless document, written by generous and brave men who only wanted to serve the common good?

Sarah Palin gave a speech a few days ago at the Oil Palace in Tyler, Texas. A clip of it made the rounds:

And, well, I have to agree with Bob Somerby of the Daily Howler, and respectfully disagree with Digby, Betty Cracker, and Bob Cesca: the speech may not have been eloquent, but it was fairly coherent. There were quite a few slips of the tongue, but it wasn’t really “word salad.”

However. READ FULL POST

Top economics writers are sending some scary signals this week. Just as June unemployment numbers are due, Paul Krugman’s declaring that we could be headed for a third Depression, and David Leonhardt, also writing in the New York Times quotes source after source saying “The world’s rich countries are now conducting a dangerous experiment.”

The dangerous experiment, both writers agree, is the idea of belt-tightening when more spending is needed, of letting stimulus lapse when most people are still struggling for jobs. During the Great Depression, when business started to improve, Roosevelt vowed to balance the budget—and sent the country back into decline. The only thing that yanked the economy into a different direction was build up to war and war.

We’ve got better ideas than that, now, right? Maybe not. A year ago, former Treasury Secretary Larry Summers told the BBC at Davos that 90s-style growth simply isn’t coming back. Yet, shunning a government jobs-creation scheme, the president’s still hoping against hope for private industry created jobs. No reason to believe the private sector will do anything different than what they’ve done these last two years. Productivity’s up with slashed wages and workers. The private sector’s doing fine. And now the deficit hawks are circling.

So what’s the plan, Uncle Sam? In many places, the military’s the only job offer out there. Democrats in Congress just cut $13B from schools to fund $33B on Afghan escalation. Maybe that’s the plan.

The F Word is a regular commentary by Laura Flanders, the host of GRITtv which broadcasts weekdays on satellite TV (Dish Network Ch. 9415 Free Speech TV) on cable, and online at GRITtv.org and TheNation.com. Support us by signing up for our podcast, and follow GRITtv or GRITlaura on Twitter.com.

News broke yesterday that Gov. Arnold Schwarzenegger and his cronies are seeking to postpone a November vote on an $11 billion water boondoggle bond measure and instead push it off to the 2012 election instead. Looks like they could already smell defeat headed their way, mostly because the state is already facing such huge budget problems to begin with. Here’s how the San Francisco Chronicle described it:

The proposition, known as the Safe, Clean and Reliable Drinking Water Supply Act, has come under increasing criticism because of its cost, the inclusion of nearly $2 billion in earmarks that opponents call pork, and a provision that would allow private corporations to own and operate taxpayer-built reservoirs and other water-storage projects. The Legislature took steps last week to remove that provision from the bond.

Sen. Lois Wolk, D-Davis, one of the few voices of reason, told the Chronicle we’re better off just scrapping the whole thing.

She said the bond is “not going to get better with age. It’s not fine wine — it’s just pork.” Hundreds of millions of dollars in the bond measure would pay for projects that have little or nothing to do with increasing California’s supply of clean and reliable water.

While postponing the proposal “certainly is a recognition that it is fiscally irresponsible, I think we need to repeal and start over,” Wolk said, adding later, “I won’t vote to postpone this bond. We should repeal it.”

And Wolk isn’t the only one with that thinking. Food and Water Watch, which has been working with a coalition of groups to defeat the water bond is issuing a call to action today:

Moving the bond to 2012 won’t make its impact on the budget any less terrible or its impact on our water any less unfair. Now or in 2012, the bond is a handout to corporate interests that want more dams and more control over California’s water. The legislature should scrap the bond altogether, not put it off.

Please call your state senator and assembly member TODAY with this message: “The water bond is bad for the budget and for California’s water, now or in 2012. I want you to scrap the water bond, not postpone it.”

Stephen Colbert was looking for some World Cup-level action from the Senate confirmation hearings for Obama’s Supreme Court nominee, but came away kind of disappointed. Watch:

Late yesterday, Democratic negotiators caved to an effort from Tea Party Sen. Scott Brown, R-Mass., to shield big banks and hedge funds from taxes that will fund Wall Street reform. As a matter of policy, the move is bad, but not bad enough to sink the legislation. As a matter of politics, it’s a complete disaster, and reflects a series of poorly handled negotiations on the financial overhaul.

And guess what? Now that Brown’s tax protection for hedge funds is part of the bill, he still won’t say whether or not he’ll vote for the final legislation.

If Brown still refuses to support the bill, it will be the third time in a month that Democratic leaders had cut a deal with him on the Wall Street package, only to see it arbitrarily undone after the Tea Party favorite got what he wanted. Back in May, he agreed to vote for the bill on the Senate floor, only to reverse his support at the last minute without informing Democratic leaders. Last week, Sen. Chris Dodd, D-Conn., agreed to carve out a massive loophole in the Volcker Rule—one of the last serious reforms still on the table during conference committee negotiations—on the condition that Brown would vote for the bill when it was kicked back to the Senate for final approval. As soon as the bill cleared the committee with Brown’s pet loophole, he announced that he could not support the bill, after all, and raised a fuss over the tax issue.

Brown’s vote only matters because Dodd has frozen two Democrats out of the negotiation proceedings entirely, in an effort to punish them for voting against the bill in the Senate. Both Sens. Maria Cantwell, D-Wash., and Russ Feingold, D-Wis., opposed the bill on the Senate floor back in May on the grounds that it was too weak to rein in obvious abuses. Cantwell has always made very clear what the price of her vote would be. She wants regulators to actually be able to enforce new derivatives regulations that the new law will allow them to write. Feingold’s demands are much broader in scope—he wants to separate risky investment banking operations from safer, boring commercial banking operations—but we’ll never know whether he could have been won over or not, because Dodd simply refused to deal with him. Let me repeat that: Instead of negotiating with members of his own team, Dodd went back to a Republican who had screwed him over just one month ago.

On policy, both Cantwell and Feingold have it right. There is no point to writing new rules if regulators can’t enforce them, and when risky activities are attached to commercial banks, taxpayers actually end up subsidizing financial excess.

What policy did Brown want? The Tea Partier, who was joined by Sens. Olympia Snowe, R-Maine, and Susan Collins, R-Maine, made a big stink about plans to pay for the bill. Establishing new agencies and getting them up to speed will cost about $19 billion—pocket change in the grand scheme of the federal budget, but pocket change still subject to PAYGO rules in the House. So the bill planned to tax banks with more than $50 billion in assets, and hedge funds with more than $10 billion in assets. That made sense—in environmental regulation, there’s a rule called “polluter pays” which states that whoever deals out ecological damage has to pay for its clean-up (we’re testing the political effectiveness of that principle with BP right now). The same concept applies to finance—companies that engage in the riskiest activities should have to pay the lion’s share of the regulatory costs that keep that risk from backfiring. Basically, that means big banks and big hedge funds should have to foot the bill—the economy is not going to collapse because a $1 billion community bank makes too many business loans, but it very well could if J.P. Morgan Chase goes bankrupt (see: bank bailout, 2008).

Even better, regulators would have had the discretion to levy this tax against the riskiest practices at big banks and hedge funds, forcing them to run safer businesses. The tax was not a major element of the reform package, but it was nevertheless good policy.

But thanks to pressure from Brown, Collins, and Snowe, we aren’t going to see a bank tax to pay for the bill. Instead, about half of the cost will be borne by higher deposit insurance premiums from banks, and another half by the redeployment of TARP money. The TARP money doesn’t matter so long as banks are forced to pay off losses from the TARP program, something Obama has promised, but is yet to be delivered.

But the premiums are a different issue. They basically serve as a tax on deposits, and they mean that firms who don’t have many deposits—including hedge funds and two of the biggest and riskiest banks, Goldman Sachs and Morgan Stanley—won’t have to pay for the bill. Instead, much smaller banks that do not pose a threat to the economy at large will have to shoulder much of the burden, as the higher premiums apply to all banks with $10 billion in assets or more.

There’s an even deeper problem with this plan. The FDIC’s deposit insurance fund—the pool of money that pays off depositors when banks fail—is already in big trouble. We’ve had far more bank failures than the fund could have handled, and was going to be demand a lot more money from banks over the next few years regardless of what is included in this bill. Claiming that a boost to the FDIC insurance fund will actually pay for anything other than bank failures for the next several years is simply a joke. In effect, Brown, Snowe and Collins have replaced a real tax with a statistical mirage. So much for Republicans getting tough on the deficit.

In other words, Dodd and Frank chose to adopt a bad policy being pushed by a proven liar instead of trying to get members of their own party on board. That’s a bad decision.

There is a political silver lining here, and it is significant. The Obama administration ultimately supported removing the $19 billion tax, because they’re pushing a separate $90 billion bank tax to recoup losses from the Troubled Asset Relief Program, and Obama doesn’t want to see that effort undercut by a much smaller issue.

As a matter of political strategy, there is room for reasonable people to disagree about this move—would it really have hampered the separate bank tax? Can we get a separate bill to pass? But broadly speaking, Obama’s position is great news. It means that the administration officially does not believe that the Wall Street reform fight will be over once this bill is passed. That’s critically important, because despite the hype coming from Democratic leaders, this bill simply will not dramatically alter the relationship between big banks and the economy. There are things to support—a significant audit of the Federal Reserve and the creation of a new consumer watchdog make the bill worthy of a “yea” vote from anyone in either party. But we still need much stronger medicine, and Obama’s position on the Brown negotiations indicates that he recognizes the need for further legislation.

What the actual scope of that legislation will be is unclear, but it’s up to activists and reformers to make sure that real reform remains on the table after the current Wall Street legislation is finally approved.

By Peter Marmorek. Crossposted from Tikkun Daily.

Your 'umble observer.

Saturday June 26th, the anti-G20 demonstration in Toronto was planned to start at 1 pm. I had been uncertain as to whether to go; originally a group of Tikkun Toronto veterans had planned an alternative demonstration, focussed around the slogan, “Open your heart to what matters more.” But the unexpected death of the brother of one core member, and difficulties around getting permission, and the predictions of violence and anarchy that the media had been purveying had reduced our enthusiasm below the critical mass we needed to make it happen. Perhaps, I thought, I don’t need to go. But the MSM descriptions of protesters against the G20 as “thugs and anarchists”, the spending of $1.2 billion on the summit, the revelation of new powers to arrest and detain that the police had been secretly given all made me feel that my right to peacefully gather with my peers was worth coming out to defend. As governments try to balance their budgets on the backs of the poor, lowering taxes on corporations and offering billions to financial institutions that have become too big to fail, surely someone should speak up. And if not me, then who? I created a “My Canada WAS a free country” t-shirt, and went down to the rally, humming the Rolling Stones’ “I went down to the demonstration, to get my fair share of abuse”. READ FULL POST

Gosh. Andrew Breitbart is willing to pay $100K to find out if anyone called him an asshole in private.

I’ll call him an asshole in public for free.

This is great:

No one will ever know who became $100,000 richer – and did the right thing, morally and ethically — by shining the light of truth on this seamy underworld of the media.

Wow, doing the right thing AND making a hundred thousand bucks paid by a highly partisan loosely principled loon. What a deal. READ FULL POST

This is by Barbara at Mahablog:

Welcome to another episode of “Righties Can’t Read.” Some rightie bloggers think they have found the smoking gun that will scuttle Elana Kagan’s Supreme Court nomination, and I have no doubt this is all we’re going to hear about Kagan for the next several days. But if you actually understand the issue in question — which leaves out righties, naturally — you’d know there is no “there” there. READ FULL POST