Cars, the Federal Reserve, and Refugees

The House this week passed three politically important bills. The first was concerned with the Consumer Financial Protection Bureau (CFPB) and its attempt to regulate car loans. The second is a bill to reform the Federal Reserve. Finally, the third is aimed at tightening the vetting rules for the large number of refugees that are likely to come to the U.S. within the next two years.

The “Reform/Audit the Fed” bill was preceded by a strong bipartisan vote of 332 – 96 to stop the Consumer Finance Protection Bureau from using statistical discrepancies to punish auto dealer loans. A coalition of Civil Rights organizations strongly opposed the measure. The CFPB is, for all practical purposes, immune to Congressional Control as its budget comes directly out of the budget for the Federal Reserve. As a consequence there is little Congress can do to stop its regulatory actions under divided government. But the CFPB actions against auto dealer loans has struck a nerve since auto dealers are in every Congressional District and the practical effect of the rule will be to raise interest rates for car loans. This vote is shown below:

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Eighty-Eight Democrats voted for the bill and 96 Democrats voted against. The APRE on this roll call is a very respectable 0.57 and the “errors” for the most part are close to the cutting line.

The “Fed Oversight Reform and Modernization (FORM) Act of 2015” is basically concerned with forcing the Federal Reserve to use a fixed formula to set interest rates. Republicans, for the most part, are suspicious of the Federal Reserve’s actions in the past few years even though many of them joined with many Democrats to pass the Troubled Asset Relief Program near the height of the financial crisis in October of 2008. Republicans almost all opposed the Dodd-Frank Act passed in July 2010. Part of the unease with the Federal Reserve is its policy of near zero interest rates with a balance sheet of $4 Trillion. This has fueled populist attacks from members of both political parties. However, this vote was largely along party lines and will likely not make the 60 vote threshold in the Senate:

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The Third important vote this week was on a bill to tighten the procedures for vetting refugees. In light of the terrorist attack in Paris members of both parties are queasy about letting in large numbers of Syrian refugees. This bill passed by a substantial margin with 42 Democrats voting for it and only 2 Republicans voting against it:

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This vote has a very high PRE of 0.8 and splits the Democratic Party. The chances of its passage by a veto proof majority of 67 in the Senate appear to be remote.

Complicating the issue of the Syrian Refugees and the CFPB vs. the car dealers, is that Congress must pass a bill funding the government by December 11 or there will be yet another Government Shutdown. These two issues are almost certainly going to be put in the funding bill as policy riders and this will trigger a confrontation with President Obama (and likely the Senate Democrats with the 60 vote threshold). Complicating matters is that Speaker Ryan does not trust President Obama and they have had a rocky relationship. Although Speaker Ryan does not want to have a government shutdown he has warned President Obama that he is not afraid to do so over some key issues such as Guantanamo Bay. So, Ho Ho Ho, another exciting Christmas may be ahead!

The Logjam Finally Breaks

With a Budget Deal in place the House was able to pass a new Defense Authorization Bill. Despite President Obama’s objections, the Bill still prohibits any funds being used to close the Guantanamo Bay Prison. President Obama has threatened to use executive powers to close Guantanamo so this issue will drag on for at least another year.

The Defense Authorization vote is shown below. Even though the vote is very lopsided the PRE is still a respectable 0.31 and the second dimension divides the Democrats:

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The long stalled Transportation Bill also passed the House on Thursday. The bill authorizes funding for three years with an addition three years “penciled in”; that is, they have to agree on the addition three years of funding at some point in the next few years. The bill also revives the Export-Import Bank which had expired June 30th. However, the Export-Import Bank is popular with many very powerful businesses such as Boeing and General Electric because it provides loans and guarantees to support U.S. exports. Although it may be “Corporate Welfare” it has broad support in Congress.

The Transportation vote is shown below. The opposition is mainly Republican Conservatives and the PRE is only 0.19:

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Expect more “Christmas Tree Decorations” before the holiday recess.

Speaker Boehner Exits Stage Right

Speaker Boehner kept his promise to make the life of his successor a bit easier by brokering a compromise budget bill that extends the Debt Ceiling until March 2017 and lifts the sequester caps to allow an addition $80 billion in spending on Defense and domestic programs. Although the bill is loaded with many “Christmas Tree Decorations” it should ensure that there is no government shutdown or a major fiscal crisis before the 2016 Presidential Election.

Below we use our Weekly Constant Space DW-NOMINATE Scores to show the budget votes in the House and Senate. In both chambers the fit in terms of Aggregate Proportional Reduction in Error (APRE) is reasonably good. Note that the vote splits the Republican Party in each Chamber:

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After the passage of the Budget “Christmas Tree” bill the House then elected Paul Ryan as Speaker. In the vote below 235 Yeas are shown when the actual was 236 Yeas. Speaker Boehner voted for Ryan as his replacement but he had too few votes to be scaled so he does not appear in the count. The 187 vote for Nancy Pelosi consist of 184 votes for her and one vote each for Colin Powell, Cooper (D-TN), and
Lewis (D-GA). The Green “R”s are the die-hard members of the House Freedom Caucus who voted for Webster (R-FL).

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Finally, some good news. Congress extended the deadline for Positive Train Control until the end of 2018 and President Obama signed the extension. This happened just in time (literally) as the Railroads were going to have to begin to curtail service within a few weeks. Now there will be no impact on the economy and we can all have a very Happy and Merry Holiday Season Everyone!