Less than one month into his term, President Obama signed the American Recovery and Reinvestment Act (P.L. 111-5), composed of some $787 billion in Keynesian spending and tax cuts aimed at jump-starting a flailing economy. The results have been mixed: GDP growth is positive again and monthly jobs figures, while never stellar, have been consistently better than their January 2009 nadir. The Congressional Budget Office estimates that ARRA, or as it's better known, "the stimulus package," staved off millions of further job losses, though unemployment remains stubbornly around the 9-10% mark, far higher than any incumbent member of Congress would like.
A year later came health care reform, when in late March of this year President Obama signed the Patient Protection and Affordable Care Act (P.L. 111-148) and the Health Care and Education Reconciliation Act (P.L. 111-152), together arguably the most impactful domestic policy package since the 89th Congress approved the creation of Medicare and Medicaid in 1965. The health care laws' provisions are barely beginning to be felt, with new high-risk insurance pools, taxes on indoor tanning salons, and rescission rules taking effect during the course of this year. Most of the major items of health care reform -- the individual mandate and accompanying subsidies to purchase insurance, the new health care exchanges, a massive Medicaid coverage expansion, a tax on unearned income for families over the $250,000 mark, and much more -- hit in 2014 and are thus still distant enough propositions to the average American. The "Cadillac tax" of 40% on high-cost insurance plans takes effect in 2018 and the Medicare "donut hole" coverage gap will not be fully closed until 2020! But it is indicative of health care's massive policy scope and overwhelming media attention that another landmark change in existing law (the Student Aid and Fiscal Responsibility Act, which ends federally guaranteed private student loans effective this coming fall semester) was passed as part of the broader package almost without notice.
The third pillar of President Obama's titanic domestic policy agenda is financial regulation, or as congressional Democrats are fond of branding it, Wall Street reform. Americans are eager to never again live through a financial meltdown and taxpayer bailout on the scale of what we saw two years ago, and polls show widespread support for a heightened governmental role in day-to-day financial sector decision-making, even as those same polls show falling public confidence in Washington's general capability level. That is, it seems that most Americans feel that the federal government is overburdening itself, but decidedly don't trust Wall Street to police itself. Knowing this, the Democrats in Congress set out to craft the largest-scale financial regulation bill since the Banking Act of 1933 (better known as Glass-Steagall, which was partly repealed in 1999). On December 11, 2009, with most of the nation transfixed and polarized by the Senate's health care debate, the House of Representatives passed the Wall Street Reform and Consumer Protection Act by a vote of 223 to 202. Among many other important provisions, the bill created a new Consumer Financial Protection Agency within the federal government; at the time, that was virtually the only facet of the bill receiving much media attention or controversy.
Five months later, on May 20 of this year, the Senate approved its own financial reform package, the Restoring American Financial Stability Act, by a 59 to 39 tally (after the legislation passed a crucial 60-to-39 cloture vote). This bill generally went much further, implementing the so-called "Volcker Rule" restricting banks from making certain speculative investments not in their customers' interests and forcing commercial banks to spin off their derivatives operations. It did, however, house the new Consumer Financial Protection Bureau within the Federal Reserve instead of establishing it as an independent government agency.
Congress spent much of June reconciling these two radically different bills, attempting to preserve the Senate's tenuous 60-vote coalition (which included Republican Senators Snowe and Collins of Maine, Brown of Massachusetts, and Grassley of Iowa but excluded defiant liberal Democratic Senators Cantwell of Washington and Feingold of Wisconsin) while appeasing House moderates and New Yorkers whose constituents include the wealthy and powerful bankers and stockbrokers any financial regulation bill would inevitably target. The Senate bill was used as a template, but in the end it was watered down in some areas (Senator Lincoln's derivatives amendment rendered slightly less absolute, auto dealers exempted from the new rules, funding provided by unspent TARP "bailout" money instead of by a new tax/fee on the banks themselves) and slightly strengthened in others (the Volcker Rule more decisively applied). Additionally, the consumer protection bureau was kept in the Fed, as the Senate bill proposed.
The final version of the bill, formally called a "conference report" because it was written by the bicameral conference committee, is dubbed the Dodd-Frank Wall Street Reform and Consumer Protection Act, and despite its concessions to powerful Congressmen and certain lobbying interests, most liberals still consider it a strong piece of legislation, and nearly everyone agrees that it promises to impact how Wall Street conducts itself as much as any law written since 1933. Whether Dodd-Frank will effectively segregate certain financial instruments from others as Glass-Steagall did for over 65 years is up for debate and currently unknowable, as is the validity of optimistic claims that the new bill will prevent another financial meltdown and ensuing bailout. Objectively, the bill does not exactly speak to the possibility of future TARP-like programs, though we might assume there will be far less public support for such efforts in the future than existed in the panicked days of fall 2008.
Of course, Dodd-Frank is not yet law. It did pass the House on June 30 by a vote of 237 to 192, and the Senate plans a cloture vote tomorrow morning. With Senator Cantwell now voicing support and Senator Grassley opposed, observers expect another 60-39 vote, clearing the way for simple majority passage thereafter. President Obama hopes to sign the bill next week.
With enactment of Dodd-Frank reasonably likely in the next week or so, it is worth noting that this will be President Obama's third mega-law, after ARRA in February 2009 and PPACA/HCERA last March. Consider for a moment the major domestic policy legislative achievements of recent Presidencies. For the last President Bush, we might remember No Child Left Behind, tax cuts, and the Medicare prescription drug benefit; for President Clinton, welfare reform, SCHIP, the Family and Medical Leave Act, and balanced budget measures; for the first President Bush...um...and for President Reagan, more tax cuts and perhaps COBRA (which was a priority of congressional Democrats, not Reagan). In any of these presidencies, a law regulating credit cards or tobacco, or placing sexual orientation under the hate crimes umbrella, or reversing a Supreme Court wage discrimination decision, or massively expanding SCHIP or Americorps, or terminating taxpayer-backed private student loans, would have counted as, to paraphrase Vice President Biden upon the enactment of health care reform, a "big [. . .] deal."
Yet these are such momentous times that such laws are merely asterisks in the unfolding story of the Obama era. We instead tend to note ARRA's massive Keynesian deficit spending and tax relief, PPACA's overhaul of basic health insurance practices -- something Presidents since Truman, if not Theodore Roosevelt, have tried and failed to realize -- and an expected new rulebook for Wall Street, in addition to the nation's lingering crises of high unemployment, eye-popping debt accumulation, and a vexing war in Afghanistan. Someday, political science students will look back at the early 2010s and wonder why they were born too late to experience such history firsthand.
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