Inside the Beltway

Risk(y) Management

Michael Steele, the oft-criticized chairman of the Republican National Committee, has spent much of his tenure both fending off accusations of fiscal impropriety and tending to his chronic case of foot-in-mouth disease. But his detractors among the Republican rank and file will have to cut him some slack if his party takes control of either the House or Senate in November, as some tracking polls suggest it could.

All the bad publicity he received in April from stories describing an RNC-funded outing to a lesbian-bondage nightclub for a bunch of over-sexed California contributors will long be forgotten if Steele and the GOP pull off a congressional coup five months from now. Less than a year ago any such suggestion would have provoked a collective snort from TV’s pack of supercilious Sunday soothsayers.

For now, it’s the Democrats who are in desperate need of a rejuvenating elixir. Why their political health deteriorated so rapidly has everything to do with health: medical and economic. And it has everything to do with risky behavior, although not in a California sex club, but where it really counts, in Washington’s corridors of power.

There is little doubt that President Obama inherited an economy in virtual freefall and a financial system in virtual lockdown. Both had their genesis in shockingly bad risk management–inside Wall Street’s wood-paneled boardrooms and within Washington’s watchdog officialdom.

The President and his advisors understood it. Congressional leaders understood it. And yet in trying to administer the cures, they failed to manage their own political risks. They failed in framing their policies in ways the public could grasp, and they failed in pursuing the remedies in ways the political enterprise could manage.

What the media labeled a Wall Street bailout they could have stamped a Main Street savings plan. And they could have foreseen the outrage about seven-figure Wall Street bonuses and restricted compensation at firms receiving federal help either by legal means, where possible, or by jawboning, where legal remedies were unavailable.

Instead, the Troubled Asset Relief Program, enacted during the waning days of the Bush Administration, has become a political liability for Obama and members of Congress on both sides of the aisle who voted for it. Not long ago, three-term conservative Republican Senator Bob Bennett of Utah learned how risky his pro-TARP vote was when, led by Tea Party activists, Utah Republicans denied him an opportunity to run for re-election in November.

Not pausing to manage political risk in the midst of the meltdown of America’s financial system might be understandable. But it’s hard to excuse the White House for ignoring the political need to focus the 2009 Recovery Act money on near-term job creation when its own PR shop was hyping the legislation as a job stimulus bill. The policy driver for a three-year economic recovery and reinvestment plan may well be correct, but Democrats should have been prepared to handle the political risk of passing a $787 billion federal program that probably would not generate highly visible public benefits prior to the 2010 elections.

Still, the political dangers inherent in the TARP legislation and the Recovery Act pale by comparison with the risks Democrats ran in pursuing the climate change and health bills without advancing a convincing argument for the inherent economic benefits of either.  To the average voter, who has lost a job or is still in fear of losing a job, those bills smacked of Washington hubris and elitism, the very perceptions that have elevated the Tea Party from a marginal movement to mainstream.

In addition to knocking Bennett out of the political arena in Utah last month, Tea Partisans can justifiably claim substantial credit for defying oddsmakers this past January by sending Republican Scott Brown of Massachusetts to the Senate and then in April virtually forcing Florida’s incumbent Republican Governor Charlie Crist to withdraw from his party’s upcoming Senate primary.

Democrats who assert that the White House was asleep at the political switch for much of last year can point with ample evidence to the fallout of the Administration’s siesta: a slew of declared retirements by prominent congressional Democrats, many of whom would be facing unusually difficult re-election races if they chose to run in November.

For science, the consequences could be substantial. Among key players who have already announced their departure are Senator Byron Dorgan of North Dakota and Representatives David Obey of Wisconsin, Bart Gordon of Tennessee and Brian Baird of Washington. The exodus list grew when Representative Alan Mollohan lost a West Virginia primary in May. Science boosters all, they will be vacating the chairmanships of committees vital to the support of research and education.  As Congress focuses on deficit reduction, these key players will no longer be there defending science’s turf.

For the National Institutes of Health, especially, the warning signs could hardly be more ominous. In the House from his perch atop both the full Appropriations Committee and the Labor-HHS-Education Subcommittee, Obey was defender exemplar of the NIH budget. And in the Senate, Arlen Specter was his reliable counterpart. But on May 18, Specter, who had switched parties last year, was upended in a Pennsylvania Democratic primary. Next January, both Obey and Specter will be gone.

Biomedical research, already under financial stress, could find itself in a budgetary straitjacket by the start of the 2012 fiscal year.  And if scientists remain politically complacent as fiscal hawks ascend to power, the rest of the research enterprise could be shackled, as well.