In it, but not of it. TPM DC

If the Campaign for America's Future is taking the lead in opposing the formation of the "Moderate Dems Working Group", then the group Third Way is their foil. When the group was announced last week, Third Way released a statement which read, in part, "We are pleased that a new working group of moderates has emerged in the Senate that is seeking to fulfill the mandate of transformational change, and we are pleased to have been asked to contribute ideas and policies to this vital group."

And that should come as no surprise. Three of Third Way's honorary Senate co-chairs (Evan Bayh, Tom Carper, and Blanch Lincoln) are also leaders of the new working group.

Matt Bennett, a Third Way spokesperson told me "we're very involved.... We were disappointed that the Campaign for America's Future came out against it." He says the group knew that Harry Reid's support would be forthcoming and disputes that the working group will stand athwart the president's agenda.

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House Minority Whip Eric Cantor (R-VA) has just released his official reaction to the Treasury Department's new toxic-asset-purchasing plan. And in an illustration of the GOP's sudden populist shift, Cantor attacked the proposal as a giveaway to big business:

As described, the plan seems to offer little incentive for private investors to participate unless the subsidy is made so rich that it comes at the expense of the taxpayer. In its current form, Secretary Geithner's plan is a shell game that hides the true cost of the program from the taxpayers that will be asked to pay for it. Six months after Congress debated the first TARP, it is inexcusable that taxpayers still have not been told their true exposure.


Disturbingly enough, Cantor's criticism of the Treasury plan echoes that of Paul Krugman, who wrote this morning:

The only way to argue that the subsidy is small is to claim that there's very little chance that assets purchased under the scheme will lose as much as 15 percent of their purchase price. Given what's happened over the past 2 years, is that a reasonable assertion?


Now, Cantor's party has yet to emerge with any coherent alternative to the Obama administration's plan -- and the GOP certainly isn't embracing anything like Krugman's pitch for greater government involvement in winding down truly insolvent banks. But when a leading conservative politician and a leading progressive economist are sending the same signals, it's safe to say that the day has taken a turn for the Carroll-esque.

Late Update: A GOP source emails to note that House Republicans did offer a plan of their own to right the markets. In September, Cantor proposed an insurance fund that would charge banks a premium in exchange for guaranteeing toxic mortgage-backed securities.

I'm certainly aware of that concept, but would argue that it's far from a viable alternative to Geithner's current tack. Time economics columnist Justin Fox explained at the time that insuring toxic assets would have the same risk of inadvertent subsidy that Cantor decried today, because setting premium levels for the banks would still require setting (likely inflated) prices for the securities being insured.

The Times also cited Cantor as admitting that the GOP plan "could only work in conjunction with a direct purchase of troubled debt by the Treasury" -- a situation in which government would be playing the same role that Geithner envisions the private sector at least partially playing. So my reference to the lack of a "coherent alternative" included the mortgage-backed-securities insurance idea.

It's really looking like Gov. David Paterson (D-NY) could be a lost cause going into 2010, with a new Siena poll saying that he would get creamed in both the primary and general elections.

Only 14% of registered voters say they would like to see Paterson elected, compared to 67% who want someone else. In a Democratic primary against state Attorney General Andrew Cuomo, Paterson has 17% to Cuomo's 67%. In a general election against Rudy Giuliani, Rudy would beat Paterson 56%-33%, while Cuomo is ahead of Rudy 51%-41%.

Things are looking better for appointed Sen. Kirsten Gillibrand, with her real obstacle being that people don't know much about her yet. Among registered voters, 23% would elect her and 37% want someone else -- but consider the fact that her favorable rating is 26%, her unfavorable number is 20%, and a solid 54% majority don't have an opinion. Against GOP Congressman Peter King, she leads 47%-23%, while she and former GOP Gov. George Pataki are tied 41%-41%.

Here's an interesting counterpoint to Brian's report on an emerging split in the progressive community over targeting business-friendly centrist Democrats. A group of high-powered Democratic consultants is recruiting corporate members for a new Obama-friendly trade group, to be christened Business Forward. As Roll Call reports (sub. req'd.):

The organization is being billed as the progressives' answer to the National Federation of Independent Business and the U.S. Chamber of Commerce.

Expected to publicly launch as early as this week, Business Forward's main goal is to gin up support among companies and their CEOs to push White House initiatives, according to lobbyists who have been approached about asking clients to join the organization.


The players behind Business Forward are well-connected to the Obama administration.

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Rep. Michele Bachmann (R-MN): Foreign corespondent on enemy lines, helping to keep the folks back home armed and dangerous.

Bachmann appeared over the weekend on the First Team radio show with John Hinderaker and Brian Ward, speaking about the horrible stuff that the Democrats are doing: "I'm a foreign correspondent on enemy lines and I try to let everyone back here in Minnesota know exactly the nefarious activities that are taking place in Washington."

Bachmann also spoke out against the cap-and-trade proposals currently making their way through Washington, and how she'll be distributing information against it at an upcoming event in the district. "I want people in Minnesota armed and dangerous on this issue of the energy tax, because we need to fight back," said Bachmann. "Thomas Jefferson told us, having a revolution every now and then is a good thing. And the people - we the people - are going to have to fight back hard if we're not going to lose our country."

On the one hand, it seems clear that Bachmann was speaking figuratively. On the other hand, is it appropriate for a member of Congress to speak in any context about being armed for revolution?

(Via the University of Minnesota and the Dump Bachmann blog.)

In the aftermath of the AIG bonus scandal, most media outlets are focusing on Congress' resistance to any more requests for bailout money from President Obama. But the nation's newfound populism is forcing another political sea change on Washington: the push to turn the Federal Reserve into the next financial super-regulator, which I wrote about on Friday, is losing steam fast.

Here's what we know so far ... Congress plans to take up a dense and politically charged reform of financial rules later this year, and among the biggest questions is which agency should become the overall "systemic risk regulator" for Wall Street and the banks.

House Financial Services Committee Chairman Barney Frank (D-MA) has said in no uncertain terms that the Federal Reserve should have the job, but Senate Banking Committee Chairman Chris Dodd (D-CT) has long doubted whether the Fed is up to the task given its mishandling of the government's AIG bailout.

What remains unknown is whether Treasury Secretary Tim Geithner and White House economic adviser Larry Summers -- the former a Fed veteran and the latter a possible Fed-chairman-in-waiting -- also agree that the Fed should become the super-regulator. Reuters reported earlier this month that Geithner would "likely" suggest expanding the Fed's powers, but the AIG bonus scandal has severely eroded support for that move in Congress.

Even Frank is cooling to the idea he once embraced, as Bloomberg noted over the weekend:

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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.

TPMLivewire