Harry Reid’s nearly 30 years of arm-twisting and dealmaking in the U.S. Senate is winding down. His last major hurrah may be a low-visibility maneuver to bail out Caesars, the zombie casino corporation in search of an alternative to bankruptcy.
Reid is pushing an amendment to Congress’s end-of-the-year omnibus spending bill which would make it easier for companies on the verge of bankruptcy to restructure, out of court, debts incurred by subsidiaries. The distressed Caesars is the obvious beneficiary of the provision.
The $1.1 trillion omnibus bill, which funds the government through September 30, 2016, must be passed by Congress and be signed into law by President Obama to avert a disastrous government shutdown, such as the one that occurred in 2013. This is one of the few pieces of legislation that can genuinely labeled “must-pass.” Members of Congress routinely trip over one another in their rush to use such spending bills to advance their pet causes, be those ideological issues, giveaways to local constituencies, or payback to major campaign donors. Reid’s provision for Caesars is just one of possibly hundreds of so-called “policy riders” that Republicans and Democrats are attempting to cram into the bill before it works its way to the president’s desk.
Proponents say this benevolent backroom wheeling and dealing by Reid will save 20,000 to 30,000 union jobs in Nevada. Brian Greenspun, publisher of the shamelessly Reid-supportive Las Vegas Sun is in this camp. “Thank goodness [Reid] is the kind of fellow who will stick to his guns when he believes he is doing the right thing, especially for the right reasons,” he wrote in an op-ed last Friday.
Cynics contend that the manipulative gaming of a dysfunctional political system to benefit well-connected special interests (Caesars has given $178,000 to Reid’s re-election efforts since 1989, according to Opensecrets.org ) is a mockery of the democratic process. That argument is strengthened by the fact that no hearing has been held on Reid’s proposal.
Both sides are right. The maneuver is simultaneously a good political gambit and yet another reason why Congress’s approval ratings have sagged to record lows in recent years.
How did we arrive at this point?
Republicans have made no secrets about their strategy of loading up the omnibus bill with ideological policy riders, such as defunding Planned Parenthood, heightening security screening for Syrian refugees, and ending the ban on U.S. crude oil exports, knowing that Democrats will not be able to negotiate away all of them and that the president will be forced to sign the remainder into law.
But the dilemma Republicans face is that even though they control both chambers of Congress, they must present a final bill that is palatable enough for the president to actually sign, meaning it must contain enough goodies for Democrats to offset the Republican demands. And because some conservative Republicans can’t be counted on to support anything resembling a reasonable bill, there will have to be a certain amount of Democratic support within Congress itself if the bill is to be passed.
This is the classic setting where political gamesmanship and negotiating skill replace the traditional (or, at least, textbook) legislative process. Deciding which riders make it into the final bill and which are axed happens within the proverbial smoke-filled room, largely outside of the public’s view.
In such a setting, an old-school politician like Reid excels. Though he displays few of the obvious political skills that one would normally associate with a modern-day Washington bigwig — especially at a time when brazen, publicity-hungry candidates like Donald Trump and Ted Cruz are topping polls for the Republican presidential nomination, Reid’s savvy for heavy-handed horse trading and dealmaking is much more useful here than is public grandstanding.
Given Reid’s position as the top Democrat in the Senate, his pet causes normally have higher priority than those of others in his caucus. However, the main opposition to the Caesars rider is not coming from Republicans but from within his own Democratic party.
Dick Durbin from Illinois, the number two ranking Democrat in the Senate, and Elizabeth Warren from Massachusetts, a bankruptcy law expert during her academic career, have fiercely objected to the Caesars rider. Earlier this month, Durbin and Warren thwarted Reid’s attempt to attach the Caesars rider to a highway funding bill that was eventually signed into law.
Durbin and Warren say that Reid’s amendment would have the unintended consequence of bailing out a subsidiary of Education Management Corporation, a for-profit college company.
The for-profit education sector has become a target of liberals in Washington because it benefits from federal funding while having shockingly high dropout and indebtedness rates among its students. Several companies have been called out for fraudulent and misleading recruiting techniques in their admissions process; Education Management Company just agreed to pay more than $80 million in monetary penalties for such violations.
Reid has modified his amendment’s language, in an attempt to narrow its scope so that it would apply only to Caesars. The change led Durbin to stand down, but there are many others in and outside of Congress, including Warren and Senator Sherrod Brown of Ohio, another Democrat, who question whether it the change in wording is sufficient.
Reid, for his part, defended his efforts to modify the federal law, known as the Trust Indenture Act, which was passed during the 1930s. “It doesn’t apply to Caesars, it applies to everybody because that’s a bankruptcy law [that] has been in this country for more than 90 years,” he said at a press conference last week.
According to media reports, there are about forty controversial riders that are still being ironed out by congressional negotiators. A temporary extension of the deadline, moving it from Friday, December 11, to Wednesday, December 16, was just passed, providing the negotiators with extra time.
The final text is expected to be unveiled on Monday, the 14th, at which point we will learn if Reid’s dealmaking prowess has succeeded once again. Regardless of what does happen, the process shows that while Harry Reid is a lame duck senator (his term expires in January 2017, and he is not running for reelection), he will not be fading out of the political limelight anytime soon.
