Morning Must Reads -- The self-pity party 

New York Times -- Obama to Propose Limits on Risks Taken by Banks

The debate raging in all the papers today is over how Obama will respond to the defeat of his party’s Senate candidate in Massachusetts and loss of a supermajority: will he triangulate like a Clinton or go back to his own liberal roots?

The fate of the health legislation that has cost Obama so dearly will be determined as the president searches for some path to a small, bipartisan bill that can pass a Congress plunged into turmoil.

Our best sign of where Obama is heading comes in his decision to do what many on the Left have been clamoring for – lower the boom on big banks.

The president has already proposed a special tax on banks to raise $117 billion, but now will, at the urging of former Fed Chairman Paul Volker, call for a ban on banks using deposits or borrowed money to make their own investments – a kind of re-imposition of the Glass-Steagall Act, repealed at the end of the Clinton era, that had kept banking and investments apart.

The proposal would also give the Treasury department the power to limit the size of banks that are “too big to fail” and perhaps dictate their risk loads.

Liberals have been calling for Obama to get tougher on the investment class, and Brown’s populist pitch may have convinced Obama that it’s time to go to war on Wall Street.

Writers Jackie Calmes and Louis Uchitelle explain:

“Now the concern is a new type of activity in which financial giants like Citigroup, Bank of America and JPMorgan Chase engage. They now operate on two fronts. On the one hand, they are commercial banks, taking deposits, making standard loans and managing the nation’s payment system. On the other hand, they trade securities for their own accounts, a hugely profitable endeavor.”


Washington Post -- After Massachusetts loss, Democrats vow to focus on economy, jobs

It’s bedlam on Capitol Hill – Democrats are attacking each other and starting to go off on their own hooks -- an end to the impressive unity that leaders were able to muster through a very difficult year.

President Obama suggested in his George Stephanopoulos interview that Scott Brown’s election was an extension of the same national frustration with the status quo that fueled his own 2008 rise to power. The stark unpopularity of almost every part of his domestic and foreign agendas, Obama said, shows that he needs to do more to communicate what he’s doing is aimed at undoing the mistakes of the Bush era.

These remarks will not restore a sense of calm confidence to Democrats in Congress, especially moderates poised to take a whipping in midterm elections from independent voters looking for a little humility from Washington.

For now, Democrats are at least in agreement that they’ve wasted too much time on health and need to be talking about job creation, almost exclusively. That is not good news for the president’s crackdown on investment or the chances to revive some kind of compromise health plan. The time it would take to negotiate something palatable to liberals but capable of bipartisan support could be destructive to the party’s hopes to show voters they are listening.

Writers Dan Balz and Paul Kane take a look inside the Democratic Thunderdome:

“Sen. Robert P. Casey Jr. (D-Pa.) said that he favors trying to finish health care but that it must be wrapped up quickly to allow a turn to a new agenda. ‘It's got to be jobs, almost exclusive of everything else,’ he said.

If the present climate holds through the fall, Pennsylvania Democrats face the prospect of losing the governor's mansion, a Senate seat and at least six House seats in November.”


New York Times – Energy and Stealth of G.O.P. Groups Undid a Sure Bet

Writers Adam Nagourney, Jeff Zeleny, Kate Zernike and Michael Cooper look at Scott Brown’s victory in what reads like an after-action report following the Battle of El Alamein.

Their basic conclusion is that Martha Coakley failed to identify the threat soon enough and that national Democrats did not respond with sufficient force to crush Brown with a negative campaign when they first felt the tremors of an upset.

The interesting angle, though, is how Republicans are willing to follow the Tea Party lead when it comes to elections this year – Tea Partiers helped get Brown out of the shadows and eventually led the GOP to helping in a race that the national party would have overlooked.

“‘For us, this is not so much about Scott Brown as it is about the idea that if we really collaborate as a mass movement, we can take any seat in the country,’ said Eric Odom, executive director of the American Liberty Alliance, who helped organize last spring’s Tax Day Tea Party rallies to protest government spending from his home in Chicago.”


Daniel Henninger -- The Fall of the House of Kennedy

Henninger draws out the implications of the Massachusetts Senate race for what may be the central battle in American political life – the fight between the government class and the private sector – by looking at the fate of Jack Kennedy’s former Senate seat.

“In 1962, President John F. Kennedy planted the seeds that grew the modern Democratic Party. That year, JFK signed executive order 10988 allowing the unionization of the federal work force. This changed everything in the American political system. Kennedy's order swung open the door for the inexorable rise of a unionized public work force in many states and cities….

They broke the public's bank. More than that, they entrenched a system of taking money from members' dues and spending it on political campaigns. Over time, this transformed the Democratic Party into a public-sector dependency.”


George Will -- Democrats on the precipice of failure

Peggy Noonan discussed the idea of “catastrophic victory” when it seemed certain that Democrats were going to have a win on health care, now Will considers how catastrophic victory would really be if Democrats pushed ahead after the clearest evidence yet that voters hate this legislation.

“In their joyless, tawdry slog toward passage of their increasingly ludicrous bill, Democrats now cling grimly to Robert Frost's axiom that "the best way out is always through." Their sole remaining reason for completing the damn thing is that they started it. The Democrats seem to have convinced themselves that they lost control of Congress in 1994 because they did not pass an unpopular health bill in 1993. Actually, their 1994 debacle had more to do with the arrogance and malfeasance arising from 40 years of control of the House of Representatives (e.g., the House banking scandal), a provocative crime bill (gun control, federal subsidies for midnight basketball) and other matters.”


--My own column on the madness of a kamikaze mission on health care is here.


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About The Author

Chris Stirewalt


Washington Examiner Political Editor Chris Stirewalt, who coordinates political coverage for the newspaper and in addition to writing a twice-weekly column and
regular blog posts.

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