In it, but not of it. TPM DC

With a number of major agenda items in the pipeline, will the Senate leadership and outside progressive groups fight the new moderate Democratic caucus in the Senate? Or does the group wield enough power that they're essentially immune to push back?

You may recall that last week, Evan Bayh paid a visit to Joe Scarborough to announce he would lead a working group of conservative Senate Democrats, modeled in some ways after the Blue Dog caucus in the House. At the time, Bayh joked that three or four of the group's fifteen members were in the "witness protection program," too intimidated for some reason or other to publicly align themselves with Bayh et al.

The new coalition could wield tremendous power. Its 15 members comprise just over a quarter of the Democratic caucus, which makes them bigger than the House Blue Dogs whose 49 members make up just under one-fifth of all House Democrats. (And, of course, in the Senate, Democratic votes are more crucial than they are in the House because every major piece of legislation is susceptible to a filibuster).

Many saw the move as the crystallization of the power of Senate moderates, a few of whom famously (or, perhaps, infamously) took control of the stimulus bill and watered it down until it met their approval. At the time, Harry Reid said, "they cannot hold the President of the United States hostage.

But now that several conservative Democrats are aligning to influence legislation on a regular basis, Harry Reid doesn't seem to care at all. In fact, he contributed a quote to Bayh's official press release, saying "If we are going to deliver the change Americans demanded and move our country forward, it will require the courage to get past our political differences and get to work," he said. "New ventures like this group offer us a new opportunity to get things done and I support every effort that puts real solutions above political posturing."

This may be filtering down through the Democratic establishment where, for the most part, there's been complete silence about the working group. The notable exception is the Campaign for America's Future, which has set up an initiative called "Dog the Blue Dogs", encouraging people to "call conservative Democrats in the House and Senate and tell them to not be lapdogs for the...right who want to obstruct the administration's common-sense agenda."

Robert Borosage, co-director for Campaign for America's Future, says "We pushed early and hard because we were alarmed that Bayh et al were publicly opposing the president a majority vote on health care and energy that could be done under reconciliation. This struck us as much more destructive than simply working hard to amend or change the president's program. This is empowering the Republican minority that has made obstruction their signature posture."

The group USAction has joined the Campaign for America's Future in circulating the "Dog the Blue Dogs" request. I have some calls out to other organizations to see whether or not they'll be taking an official position, but early signs suggest they will follow Reid's lead and won't be particularly vocal opponents of the so-called Moderate Dems Working Group.

While official Washington remains publicly preoccupied with executive compensation and the bailout, labor and business interests continue jockeying for position on the Employee Free Choice Act (EFCA) ahead of its likely congressional consideration in the summer.

The latest round came this weekend, when the CEOs of Costco, Whole Foods, and Starbucks offered an EFCA compromise that would deny workers the right to arbitration with employers who resist union organizing efforts.

Backers of the EFCA "alternative" have enlisted Lanny Davis, the former Clinton White House adviser turned supporter of Joe Lieberman's 2006 re-election bid, to plead their case on the Hill. And it's not going well so far, to say the least -- senior Democrats are pushing back hard at the compromise offer with a series of talking points that blast the EFCA "alternative" as "written by CEOs, for CEOs."

TPMDC has obtained a copy of the complete memo on the business-friendly deal, which is available after the jump. The takeaway is clear: Senior Democrats aren't buying what Davis is helping Costco, Whole Foods, and Starbucks try to sell.

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A new Rasmussen poll finds solid approval for the proposed 90% bonus tax: 57% in favor, to only 35% against.

And the AIG bonuses have now left the company in a very precarious position, with 67% agreeing that the federal government should refuse to provide the company with any further financial support.

At the same time, 81% say Congress does not have the right to raise taxes on all Americans retroactively -- though clearly, there's an exception to this general rule.

Since TPMDC first noted on Friday that the Senate was putting the brakes on the AIG-inspired bonus taxation bill, the signs of a further slowdown are piling up.

As more banks warn that a broad bonus tax would drive them out of the open arms of the Treasury Department, even senior figures in the Obama administration are suggesting that the House's 90% levy on this year's bailout bonuses might not reach the president's desk.

But where does that leave the Senate, which aims to take up the bonus tax plan in the coming days? In a potential pickle, with must-get centrists such as Kent Conrad (D-ND) and Susan Collins (ME) cool to the idea and Majority Leader Harry Reid (D-NV) already facing a huge challenge in marshaling support for the White House budget -- which is scheduled for floor consideration starting next week.

Even House Financial Services Committee Chairman Barney Frank (D-MA) -- who is supporting a bonus tax bill that would impact far more companies than last week's AIG-inspired measure -- took a mushy line on the 90% tax yesterday, telling CBS: "I voted for the bill. I was not a major advocate for it."

If senior lawmakers keep coming down from last week's woozy, angry anti-AIG high, look for tomorrow's testimony from Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke to be more of a test of political capital for Geithner than an AIG frustration-fest.

The latest corporate disasters have become the big thing in the March 31 special election for Kirsten Gillibrand's old House seat, with the Dems now firing back after the Republicans attacked Democratic candidate Scott Murphy's support for the stimulus bill as tantamount to support for the AIG bonuses.

The DCCC has this new attack ad, going after Republican Jim Tedisco for having written a letter in support of leniency against a businessman convicted in a mortgage-company scandal back in 2003:



"But Tedisco did help a wealthy mortgage executive convicted of millions in fraud -- asking the judge to go easy on him," the announcer says. "Then the convicted felon's company became one of Tedisco's top campaign contributors."

Late Update: A statement from Tedisco spokesman Adam Kramer hits the Democrats right back by pointing to Murphy's recently-stated total opposition to the death penalty -- even if it includes the 9/11 terrorists -- and continues to press the attack that Murphy is for the AIG bonuses:

"Discredited attacks will do nothing to reverse the spiral of Wall Street executive Scott Murphy's campaign. It's ironic that Washington Democrats would bring up the issue of leniency just days after Murphy made clear that he is opposed to the death penalty for 9/11 terrorists but fine with rewarding failed executives at companies like AIG."


There is a certain irony in this campaign -- the Republican is running as a populist, and the Democrat is being attacked as an out of touch Wall Street executive.

Geithner Unveiling New Bank Plan Treasury Secretary Tim Geithner is rolling out the new bank rescue plan today, with a new op-ed piece in the Wall St. Journal explaining the workings of the Public-Private Investment Program, which involves the government partnering with private investors to purchase between $500 billion and $1 trillion in assets that are now clogging up the financial system. "Our approach shares risk with the private sector," Geithner writes, "efficiently leverages taxpayer dollars, and deploys private-sector competition to determine market prices for currently illiquid assets."

Obama's Day Ahead President Obama and Vice President Biden will be receiving their economic daily briefing at 11:15 a.m. ET, accompanied by a media pool spray, with Treasury Secretary Tim Geithner, FDIC Chairwoman Sheila Bair, and Federal Reserve Chairman Ben Bernanke. Obama will also be speaking at 12:30 p.m. ET from the Eisenhower Executive Office Building, delivering remarks on clean energy and proposed investments in new technology included in his budget plan.

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Obama Defends Geithner -- Says He Would Not Accept A Resignation In an interview with CBS, President Obama stood by Tim Geithner's performance as Treasury Secretary, joking that he would not accept a resignation even if it were ever offered: "Sorry, Buddy, you've still got the job."

Biden Economic Adviser: Bonus Tax May Have "Gone Too Far" Jared Bernstein, the top economic adviser to Vice President Biden, told ABC's This Week that the bonus tax bill from the House may have "gone too far," and that there are serious concerns about its constitutionality. "That said, let's see what comes out of the Senate," said Bernstein. "He [President Obama] has not said he won't sign this bill. Let's see what comes out of the Senate. Let's see what gets to his desk."

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Obama Promotes Budget In New Web Address In this weekend's YouTube address, President Obama lays out the priorities of his budget on issues such as energy, health care, education, and fixing the deficit:



"I realize there are those who say these plans are too ambitious to enact," said Obama. "To that I say that the challenges we face are too large to ignore. I didn't come here to pass on our problems to the next President or the next generation - I came here to solve them."

Barbour: Obama Budget "Massive Government Spending Spree" This weekend's RNC YouTube address is delivered by Mississippi Gov. Haley Barbour, blasting the proposed Obama budget for taxing and spending:



"While families are cutting back, President Obama has proposed a massive government spending spree," said Barbour. "It reminds me of how one of our old senators used to joke about the federal budget. He said it was like a newborn baby: insatiable appetite at one end and total irresponsibility at the other."

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Did the campaign of Jim Tedisco, the Republican candidate for Kirsten Gillibrand's old House seat, cite itself for praise of the candidate?

A few weeks ago, Tedisco came out with this ad, containing a quote that Tedisco has "a proven record of public service":



The quote is then sourced to r8ny.com. But it turns out that a Google search of r8ny.com shows only two pages saying Tedisco has a "proven record of public service" -- and they are both Tedisco campaign press releases.

A Tedisco spokesman did not have any more details on this particular aspect of the ad as of this writing, though the spot itself was taken out of circulation a while ago.

As D.C. legend has it, George Washington told Thomas Jefferson that the Senate was designed as a saucer to "cool" the heat of House-passed legislation. Put another way, the Senate has a talent for helping bills grind to a screeching halt after arriving from the House, where the majority party has more power.

And this week's outrage-fueled AIG bonus tax is no exception. One day after the House passed a 90% retroactive levy intended to claw back bonuses at the infamous company, the future of the bill in the Senate remains less than clear.

The Senate version of the bonus tax is more measured than the House version, imposing a 35% tax on bonuses. But it also applies the tax to any company receiving more than $100 million from the bailout, while the House measure only applied to firms getting more than $5 billion. Several senior GOP senators, from Judd Gregg (NH) to Jon Kyl (AZ), have blasted the tax bill in recent hours, suggesting that Republican leaders may split on the proposal, just as they did in the House.

Could Republicans mount a filibuster of the bonus tax bill next week? Anything is possible in the current volatile political climate -- especially after today's revelation that the House bill would exempt $2.5 billion in hasty bonuses awarded last year at Merrill Lynch.

Ultimately, however, the political risk of appearing tolerant of AIG's bonuses is sure to push at least a few GOP senators over to the "yes" camp. Then the X factor becomes whether any Democrats will take the unpredictable route and raise questions about the bonus tax's constitutionality.

For an accurate reading of the tea leaves, check out this headline from Dow Jones (emphasis mine): "Sen. Reid: Senate Should Take Up AIG Bill Before April 6."

TPMLivewire