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Legislative Updates: May 2014


Capitol Call

By May of an election year, campaign themes generally emerge. Arguments are made for one party and against the other one. Attempts to paint the other party as “out of touch” with the “middle class” become increasingly frequent. And the “middle class” becomes pretty much any voter that is not an “elite.” “Special interests” suddenly become menacing creatures, lurking in the shadows of the Capitol. Bipartisanship becomes anathema to many in Congress, especially to those who are in tight re-election races and need to rally their core supporters.

In the Senate, the majority Democrats have chosen inequality as one of their main campaign themes, hammering the point that, because of the Republicans, Americans are as unequal as ever, with the “middle class” getting left behind as the economy recovers. They want to pass several bills that they will believe will make society more equal and better off. But they need a foil in order to rally voters to support their candidates. Sure enough, once the Republicans blocked an effort to raise the minimum wage in April, Senate Democrats were eager to paint their counterparts as out of touch with the middle class. If it had passed, they would have lost a major talking point.

Over in the House, the Republican leadership has focused on two issues of late that resonate with their party base but are not seen as important by Americans at large. Several hearings have already been held on the Benghazi issue, but just this week Speaker John Boehner (R-OH) appointed Congressman Trey Gowdy (R-SC) to chair a Select Committee that will be tasked with investigating the two-year old issue even further. Additionally, the House recently voted to hold former IRS official Lois Lerner in contempt of Congress because of her refusal to testify at a hearing last year. While the two issues may be worthy of investigation, the fact remains that they have very little to do with the Republicans’ self-proclaimed “laser focus” on their top priority of passing legislation designed to improve the economy.

Of course, political maneuvering is as old as politics itself, and it is never more evident than the spring of an election year. Many Washington observers believe that the majority parties in Congress would rather blame the other party for obstruction than actually pass legislation. A cynical view, perhaps, but it is clear that messaging is just as important as legislating to both parties.

In a standard oversight hearing devoid of (much) political maneuvering, SEC Chair Mary Jo White appeared before the House Financial Services Committee last month to discuss recent goings-on at her agency. Most of the questions related to high-frequency trading and market structure issues. Not coincidentally, a new Michael Lewis book on high-frequency trading has been the talk of the financial world lately. She assured the Committee that the stock markets are not “rigged” against the individual investor, a central theme of Mr. Lewis’ book. Many of the Republican members expressed skepticism with Mr. Lewis’ book, while many Democratic members asked pointed questions to Chair White about whether the public has equal access to market data and whether it is fair for big institutions to be able to buy data feeds. Chair White, wisely choosing not to wade into a political issue, responded to the Democrats’ inquiries that the SEC is aware of the issue and believes that market structure is an important topic to review, but declined to elaborate further.

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