If President Barack Obama wins re-election in November, the Democrats' agenda for the financial policy realm is likely to be far more about defending their past achievements than scoring new ones.
In interviews with lawmakers in Charlotte this week, Democrats said that this election is their opportunity to cement the Dodd-Frank Act,
"I can't imagine an ambitious agenda coming out of Democrats in Congress," said Rep. Brad Miller, D-N.C., who is retiring from Congress, in reference to the next 12 months. "Their energies will be taken by the effort to protect the reforms that we passed."
Rep. Al Green, D-Texas, a member of the House Financial Services Committee, agreed. "I think that if we can take the House again, we can make sure that Dodd-Frank does what it's intended to do," he said.
Politically, the best-case scenario for Democrats involves the reelection of President Obama, holding onto their narrow majority in the Senate, and eking out control of the House — an outcome that House Minority Leader
But neutral observers say a more likely outcome would resemble the status quo in Washington — Democrats retaining the White House and holding onto Senate control, while Republicans maintain control of the House.
Under either scenario, some GOP buy-in would be necessary to pass legislation, since no one expects the Democrats to hold a filibuster-proof majority in the Senate.
Democrats argue that it will be up to the Republicans — on a range of issues affecting the economy — to decide whether they are going to continue a legislative strategy that the Democrats characterize as obstructionism.
"If the president wins, as we expect that he will, then the Republicans will have to make a choice," said Dan Pfeiffer, White House communications director, during an event this week in Charlotte hosted by Politico. "Are they going to continue down the path they've been on … or will they make a change?"
In financial policy, the one major area where there is bipartisan agreement on the need for congressional action is the reform of Fannie Mae and Freddie Mac. There is also a widespread belief that a reform bill can only become law if Democrats and Republicans work together to find a consensus.
"I think ultimately it's going to take compromise," Green said. "I don't think either side is going to have its way."
To reach a deal, Democrats and some of the more conservative members of the Republican Party will have to overcome an ideological disagreement about whether the federal government should continue to provide a backstop to the U.S. housing market as well as a significant amount of mutual distrust on the issue.
Last week at the Republican National Convention in Tampa, Republicans blamed the Obama Administration for failing to keep its word that it would provide a more detailed plan on reform of the government-sponsored enterprises. This week in Charlotte, House Democrats faulted their GOP counterparts for not moving forward with a plan of their own — after trumpeting their own ideas when Democrats controlled the House.
"It's extraordinary how little the committee has done in two years," said Rep. Barney Frank, D-Mass., the top Democrat on the House Financial Services Committee, who is also retiring from Congress this year. "I think it's been one of the great legislative failures."
Members of both parties insist publicly that it is possible to pass a bill to reform Fannie and Freddie in 2013. Privately, though, some insiders acknowledge that it will be extremely difficult to move reform of the housing giants onto the national agenda during a year in which deficit reduction is expected to dominate the political debate.
While a law to reform the government-sponsored enterprises appears to be a long shot in 2013, it seems more likely that the Obama Administration will lay its own cards on the table next year. The administration released a
Today, some on Capitol Hill believe that the administration has done more work behind the scenes than it has shown publicly and is waiting until after the election to release a more detailed reform plan.
