ginandtacos.com

Sometimes – OK, most of the time – I think it would be pretty cool to be a Big Name Blogger; carried by major media outlets, rubbing shoulders with media celebrities, and raking in 50,000 hits per day. Then I remember that popularity of that kind draws one into the Beltway world and, given enough time and exposure to the media Villagers, turns you into another milquetoasty cog in the machine that churns out the bland, "moderate" product that passes for journalism these days. Fortunately I'll never have to figure this out firsthand but I think that no matter how progressive you are, every day immersed in that world makes you sound just a little bit more like David Brooks. Before anyone realizes what happened you're on TV telling the President to run to the center. You start talking about being "mature" and "realistic" with alarming regularity. Policy advocacy goes out the window in favor of satisficing (Herbert Simon's wonderful portmanteau of satisfy and suffice) and accept catering to the mushy center. Maybe something in cocktail wieners – or whatever gets served at exclusive Beltway circle jerks – makes settling for mediocrity seem appealing.

Ezra Klein is a pretty good read. He has widely been considered one of the bright lights in a dim field of political commentators. This makes it all the more shocking to see him grab his ankles for Evan Bayh in this puzzling, rambling, open-ended interview. Bayh makes some valid points and of course his premise – that the Senate is fundamentally flawed – is reasonable. At the same time he is using Klein to go on the traditional Retiring Senator Jeremiad about how irrevocably broken the institution is, how valiantly he tried to make it right, and how in the end the forces of Evil were just too powerful. The fact is that Evan Bayh is exactly what is wrong with the Senate and I find it irresponsible at best that Klein not only failed to call him on it but served as a one-man cheering section throughout Bayh's sanctimonious, pedantic, Lieberman-esque lecture.

He complains about the "six year campaign." What meaningful campaign finance reforms did he propose or vote for during his tenure?

He whines about the influence of moneyed interests. No doubt his principled opposition to health care reform was not influenced by the millions and millions of dollars that Indiana insurance giant WellPoint channeled through Mrs. Bayh as a poorly disguised bribe.

He complains about self-interest a few paragraphs after complaining about how he'd never get a chairmanship because of the Democratic rules.

His grand example of the failure to protect the common good is the members of his own party who refused to cater to GOP talking points about "deficit reduction" and the discredited economics that underlie them.

He says "Ezra, is we're on the path of political least resistance. Make no hard decisions…" after he quit.

He talks about real statesmanship being defined as making tough choices and doing something for the good of the whole even if it isn't your preference. Why did he repeatedly hold up his own party's legislation until it looked more like Evan Bayh wanted it to look? (i.e. like something the Republicans wrote)

He calls himself a "progressive" repeatedly and Klein is too busy sucking to call him out on it.

He talks repeatedly about being a deficit hawk and Klein never asks him why he voted to repeal the Estate Tax and for the massive Bush-era tax cuts.

Bayh's grand message is that good people are caught up in a bad system. That sounds more than a bit like the Nuremburg Defense. The system is made up of people, and Evan Bayh is one of them. Maybe the problem is more complex than Senate rules and the need for constant fundraising. Maybe the real problem is that retiring Senators suddenly start talking about very big ideas that were strangely absent during their time in office. Now that he has had this spiritual epiphany he's quitting a position of tremendous power because attempting to fix the problem would be too hard. Thanks for playing. I have fifty bucks that says he takes a lobbying job six months after his term ends.

I hope Ezra Klein re-reads this a few times and does to his own work what he failed to do in his talk with Bayh; that is, to ask a few critical, tough questions about his performance.

Your enthusiasm for the academic literature on Congressional oversight is palpable. I knew that post needed more dick jokes.

The speed with which most academic research is obsoleted, especially in the social and behavioral sciences, is something of a punchline. It is deserved to some extent, but there are a number of "classics" in any field which stand the test of time. In political science, McCubbins and Schwartz produced their seminal work on Congressional oversight in 1984 and it hasn't been improved upon in the intervening years (although Aderbach's Keeping the Watchful Eye from 1990 expands upon it). If this paragraph has thus far caused your eyes to glaze, I promise this is more interesting than it sounds.

Congress is constantly delegating authority to various Federal agencies – the EPA, Securities and Exchange Commission, FDA, etc. – and one of the fundamental questions of politics is how (or if) Congress can control them after handing over the keys. Staffed largely by unelected (and un-fire-able) civil servants, the agencies are something of a leviathan and Congress can very quickly lose control of policy. Traditionally it was thought that oversight required Congress to hover over the agencies and crack the whip when they deviate from their mission. Yet there is no evidence that this happened, so it was widely assumed that Congressional oversight was limited at best.

McCubbins and Schwartz relied on a very old concept – classic Madisonian pluralism – to solve the puzzle. Their analogy, not to mention the title of the paper, is "Fire alarms vs. police patrols." The police engage in costly hands-on oversight. They cruise around looking for crimes being committed and, provided the offender is black or Latino, they chase after them yelling, "Stop, evildoer!" This is time- and labor-intensive. It costs a lot of money. But preventing crime is judged to be worth the cost. The fire department operates much differently. They don't cruise around looking for fires. They are organized to respond quickly, but only when someone says "Hey, there's a fire!" In this scenario, you and I are effectively the regulators.

This idea was intended to describe how Congress monitors regulatory agencies, but it has come to accurately describe the behavior of regulators themselves. This is partly by design – Reagan-era ideas about "getting government off our backs" – and partly of financial necessity. The public and interest groups become the regulators, sounding the "fire alarm" when necessary. It's not always a great system. The Food & Drug Administration (or the FAA, or OSHA, or whatever) has nowhere near enough people to do police patrols, actively seeking out safety violations. So they respond to fire alarms, i.e. a few dozen people get e.coli, someone loses an arm in a kick press, or a plane goes down. Both the regulatory agencies and the Congress that ostensibly monitors them are designed to react, not to prevent. Neither the political will nor the resources to engage in preventative regulation exist.

OK. Now the point.

Mike draws our attention to an old Baseline Scenario piece on the House GOP version of financial reform, which is relevant because what is about to come out of the Senate is really, really similar:

…creates an Office of Consumer Protection within the [Financial Institutions Regulator]. The Office of Consumer protection is responsible for all consumer protection rulemaking under the Consumer Credit Protection Act, and will coordinate with the other divisions of the FIR in enforcing consumer protection. Establishes a consumer complaint hotline for the timely referral and remedy of consumer complaints, regardless of charter type or regulatory structure. Requires the Office of Consumer Protection to use extensive consumer testing prior to the promulgation of new consumer protections. Requires a comprehensive review of consumer protection rules and regulations on a regular basis with reports to be issued to Congress based on inaction or action with regards to consumer protection standards.

So the GOP idea of regulation is a hotline, a phone in the basement at Treasury. We wait until something devastating happens and then we spring into action…by calling this number and saying "Hey, something devastating happened!" well after the opportunity to do anything meaningful has passed. N.B. the cute language about "testing" regulations and doing a periodic review so Congress has a regular opportunity to cut whatever the banks are complaining about.

It is entirely understandable that Congress oversees regulatory agencies in this manner. Their time is finite and the demands for their attention are many. For the agencies themselves, however, this is demonstrably the worst possible way to regulate. It gives us little more than good autopsies; the role of Federal agencies is to show up after the fact and explain the disaster they failed to prevent. So what we are getting in terms of financial reform (and I defer the nuts/bolts to Mike) is a regulatory body that will be empowered to do little except write a nice, detailed 9/11 Commission Report for the next crash. If we can't regulate derivatives I guess that's the next best thing, right?