Republicans got to work early in 2009 to recruit Springfield, Oregon mayor Sid Leiken to challenge incumbent Democratic Congressman Peter DeFazio, who represents a swing district that split its 2004 presidential vote equally between George W. Bush and John Kerry (though backed Barack Obama in 2008 fairly handily in 2008). At the time, Leiken was promoted as one of the top recruits of the National Republican Congressional Committee. But now comes news, via Blue Oregon, that Leiken is dropping his congressional bid.

Initially lauded by Republicans nationally as their best hope to win a House seat long held by Democrats, Leiken faced an uphill battle against DeFazio, a 24-year incumbent. Leiken did poorly in campaign fundraising; as of the most recent filings, DeFazio had at his disposal more than 100 times Leiken’s campaign cash.

Plus, observers said Leiken’s violation of Oregon campaign laws last year could have hurt him. Leiken paid a $2,250 fine for unlawfully converting $2,000 of his mayoral campaign money to personal use.

If this were a Democrat dropping his bid against a Republican in a swing district, you know that this news would be all over the Beltway press as further proof that the Democrats' are sinking in the race to control the House in November. Of course this is a Republican dropping his bid against a Democrat in a swing district, so this news is absent from the home pages of Politico.com, TheHill.com, and CQPolitics.com.

Members of the House Populist Caucus held a press conference on Thursday to endorse a bill that would "assess a small fee on Wall Street day traders to pay down the national deficit and invest in America's middle class families." From a press release issued by Populist Caucus Chairman Bruce Braley (IA-01):

"Our nation continues to be crippled by a struggling economy which has resulted in an astronomical unemployment rate of 10.2 percent," [Representative Peter] DeFazio [OR-04] said.  "The American taxpayers bailed out Wall Street during a crisis brought on by reckless speculation in the financial markets.  This legislation will force Wall Street to do their part and put people displaced by that crisis back to work." [...]

The legislation will assess a small securities fee on the following transactions:
·         Stock transactions (tax rate will be 1/4 of 1 percent--0.25%),
·         Futures contracts to buy or sell a specified commodity of standardized quality at a certain date in the future, at a market determined price (tax rate will be 0.02%),
·         Swaps between two firms on certain benefits of one party's financial instrument for those of the other party's financial instrument (tax rate will be 0.02%)
·         Credit default swaps where a contract is swapped through a series of payments in exchange for a payoff if a credit instrument (typically a bond or loan) goes into default (fails to pay) (tax rate will be 0.02%),
·         And options, which are contracts between a buyer and a seller that gives the buyer the right, but not the obligation, to buy or to sell a particular asset on or before the option's expiration time, at an agreed price (at the rate of the underlying asset).

To ensure the tax is appropriately targeted to speculators and has no impact on the average investor and pension funds, the tax will be refunded for:

1)      tax-favored retirement accounts,

2.      education savings accounts,
   
3.      health savings accounts,
   
4.      mutual funds and,
   
5.      the first $100,000 of transactions annually that are not already exempted.

Braley spokeswoman Caitlin Legacki told me that as of this morning, the bill has 21 co-sponsors, 14 of whom belong to the Populist Caucus.

The bill has at least one champion in the Senate. HELP Committee Chairman Tom Harkin appeared with Populist Caucus members at yesterday's press conference. I don't know whether any Democrat on the Senate Finance Committee is willing to push for this measure.

I haven't seen any reaction yet from the Obama administration. Supporting this bill should be an easy call, but my hunch is that Treasury Secretary Timothy Geithner and senior presidential adviser Larry Summers will have Wall Street's back on this one. Here's hoping I am wrong about that.

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I've made it perfectly clear that I'm against the bailout bill. That being said, I'm open to other ideas. There is an alternative to this bill put forth by Rep. Peter Defazio (D) that sounds promising. It's titled "No bailout act." See below for the summary of the bill:

http://www.swamppolitics.com/news/politi cs/blog/2008/09/bailout_alternative_offe red_ho.html

Bringing Accounting, Increased Liquidity, Oversight and Upholding Taxpayer Security

1) Require the Securities and Exchange Commission (SEC) to require an economic value standard to measure the capital of financial institutions.

This bill will require SEC to implement a rule to suspend the application of fair value accounting standards to financial institutions, which marks assets to the market value, no matter the conditions of the market. When no meaningful market exists, as is the current market for mortgage backed securities, this standard requires institutions to value assets at fire-sale prices. This creates a capital shortfall on paper. Using the economic value standard as bank examines have traditionally done will immediately correct the capital shortfalls experienced by many institutions.

2) Require the Securities and Exchange Commission to restricting naked short sells permanently

This bill will require SEC to implement a rule that blocks naked selling, selling a stock short without first borrowing the shares or ensuring the shares can be borrowed. Such practices many times harm the companies represented in the sales and hurt their efforts to raise capital. There is no economic value produced by naked short sales, but significant negative effects.

3) Require the Securities and Exchange Commission to restore the up-tick rule permanently.

This bill will require SEC to implement a rule that blocks short sales without an up-tick in the market. On September 19, 2008, the SEC approved a temporary pause of short selling in financial companies "to protect the integrity and quality of the securities market and strengthen investor confidence." This rule prevents market crashes brought on by irrational short term market behavior.

4) "Net Worth Certificate Program"

This bill will require FDIC to implement a net worth certificate program. The FDIC would determine banks with short-term capital needs and the ability to financially recover in the foreseeable future. For those entities that qualify, the FDIC should purchase net worth certificates in these institutions. In exchange, these institutions issue promissory notes to repay the FDIC, counting the amount "borrowed" as capital on their balance sheets. This exchange provides short term capital, with not cash outlay. Interest rates on the certificates and the FDIC notes should be identical so no subsidy is necessary.

Participating banks must be subject to strict oversight by the FDIC including oversight of top executive compensation and if necessary the removal of poor management. Financial records and business plans should be subject to scrutiny while participating in the program.

In 1982, Congress approved a program, known as the Net Worth Certificate Program, that allowed banks and thrifts to apply for immediate capital assistance. From 1982 to 1993, banks with total assets of $40 billion participated in the program. The majority of these banks, 75%, required no further assistance beyond the certificate program.

5) Increase the FDIC Insurance limit from $100,000 to $250,000.

The bill will require the FDIC raise its limit to provide depositors confidence that their money is safe and help eliminate runs on banks which are destabilizing to the industry.

The best part about the above plan is the fact that it wouldn't require taxpayer money to implement. Why is congress not considering this bill?

Here's some of the pork that's been added to the current bailout bill aka crap sandwich.

http://www.miamiherald.com/news/politics /AP/story/709715.html Also included were more obscure terms extending tax breaks for motor-sports racing tracks, makers of wooden arrows for children, and the rum excise tax for Puerto Rico and the Virgin Islands.

Folks, here's the bottom line; congress is addicted to spending YOUR MONEY.

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Bumped--Chris

Peter DeFazio announced in an interview that he would not run for Senate in 2008:

"This was not an easy decision," DeFazio said. "You don't get a poll that shows you're ahead of an incumbent senator and generous offers of support from the Democratic Senatorial Campaign Committee and just blow it off. It was a long and serious deliberation on my part."

Bummer. Pete would have been hands down the best Senate candidate we could ask for. That said, now is not the time for hand-wringing or woe-is-me-ing. In some ways, I'm glad DeFazio made his intentions clear, because we've already got a candidate, and a great one at that.

With DeFazio unequivocably out, Steve Novick, who announced his candidacy to a packed ILWU hall in Northwest Portland on Wednesday, should get a boost from activists who have been holding out, waiting for DeFazio to make up his mind.

This was something that was mentioned explicitly at Novick's announcement during their clever, "opt-out" fundraising and volunteer appeal -- you can wait all year for other "maybes" to make up their minds, or you can get behind the strong progressive who is already running hard and running to win.

Honestly, after hearing it a few times, I'm a little tired of the "strong left hook" line (Novick was born without a left hand, and uses his prosthetic grasping appliance for comedic advantage), but I don't think Novick will ever wear thin on me.

And he can win. You've read Jonathan Singer's interview with him and you know he's got the policy chops, but if you haven't seen him speak, you still underestimate this man. He's not a polished orator (as Portland City Commish Randy Leonard said, in contrasting Novick to Gordon Smith, "Steve Novick is not a cosmetic candidate") but his passion, brilliance, and sense of humor come accross clearly. You can't help but engage with him, he reels you in, so to speak, hook line and sinker.

And maybe money won't be as big a hurdle as some have suggested. As he and others pointed out many times on Wednesday, plenty of hardball style populists have won with huge cash disadvantages. But also, Oregon wants a progressive Senator very very badly. He's already raised almost five large on ActBlue in just a few days, and is camped out at #3 on "todays hot pages". In the wake of DeFazio's announcement, look for this to heat up even more.

[cross posted at Kos.]

Over at The Fix, Chris Cillizza moved the Oregon senate race up to number five (from six last week) on the strength of DeFazio's potential entry. Here's what he had to say:

5. Oregon: Recruiting Senate candidates is a funny business. A few weeks ago, Rep. Peter DeFazio (D) pronounced himself uninterested in a challenge to Sen. Gordon Smith (R). One poll later and DeFazio has not only opened the door a crack but is quoted attacking Smith as a "flip-flopper" in the local press. Hmmm. We don't pretend to know what DeFazio is thinking, but it sure seems like the idea of a Senate race is intriguing him more and more by the day. Democrats acknowledge that DeFazio is their preferred candidate, but believe if he doesn't run either Rep. Earl Blumenauer or state Treasurer Randall Edwards will get in. If DeFazio is the candidate, this race will almost assuredly move up the Line. (Previous ranking: 6)

I like the sound of that last sentence. So should any Oregonian (or anyone who would love to see another Wellstone progressive in the Senate!)

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