Rep. Barney Frank (D-MA) caused a bit of a stir when he announced he was not seeking re-election. Frank, a high-visibility member of Congress for more than 30 years, is in one of the safest Democratic districts in the nation. Yet he is not alone: there are several other Barney Franks fleeing the 112th Congress. Eight other veteran House Democrats who reside in safe congressional seats are throwing in the towel.

The problem isn’t merely in the House. Just this week, U.S. Senator Ben Nelson from Nebraska announced he won’t seek re-election this coming November. Nelson is one of seven Senate Democrats who have decided to “voluntarily” retire ahead of the 2012 elections. This is a repeat of the 2010 elections when a flood of Democrats decided to retire rather than face certain defeat.

The retirement of rank-and-file Democrats is an especially bad sign for the Democrats if they have any hope of retaking the U.S. House. The nine House retirements are even more notable because each ranks high in seniority for key House committees — if the House returned to Democratic rule, they would be in line to assume chairmanships.

Chairmanships are great perks, offering hideaway offices in the Capitol building and less restrained power and authority. Voluntarily walking away from Hill leadership is uncommon: House members can sit for twenty years on the Hill and never get close to a chairmanship.

To Democratic Party faithful, the nine retiring congressmen present a dramatic picture of the hostile environment Democrats are facing as the 2012 election begins. Some of the retirees had easily won re-election with 60-70% majorities. Their stampede for the exit is yet another admission that the Democrats face a potential “wave” election, and of course, it portends considerable trouble for Barack Obama.

The accelerating House retirements come on the heels of last September’s special election in New York, where an unknown Republican defeated a popular Queens Democrat to take Anthony Weiner’s seat. The New York congressional district was Democratic for 80 years — registered Democrats outnumbered registered Republicans by a three-to-one margin.

Barney Frank is, of course, the headliner of this group: he is one of the best-known and most powerful Democrats outside of House Minority Leader Nancy Pelosi (D-CA), serving 16 uninterrupted terms. When the Democrats held the House during the first two years of the Obama administration, the Massachusetts Democrat served as the undisputed power at the House Financial Services Committee, muscling through many regulations that pummeled banks. His name is on the Dodd-Frank law, which threatens to impose new regulations on all financial institutions. The law is so complicated that, two years after its enactment, administration regulators still have failed to issue rules for methods of enforcement.

Including Frank, the departing group represents a wealth of experience that will not be easy to replace: The nine have served in office for a combined 172 years.

Read more here. Is it any wonder Alexandra Pelosi believes her mother wants to leave Congress?

Democratic Sen. Ben Nelson of Nebraska will announce today that he is retiring after two terms, a serious blow to Democratic efforts to hold on to their majority in the chamber next November.

Nelson is scheduled to hold a press conference back home in Nebraska as early as today to make his decision official, said several Democratic insiders close to the leadership.

The 70-year-old Nelson was considered one of the most endangered Democratic incumbents this cycle. GOP-affiliated outside groups have already dumped hundreds of thousands of dollars into TV ads bashing Nelson, while the Democratic Senatorial Campaign Committee spent over $1 million on its own ad blitz to bolster his image.

The White House and top Senate Democrats, including Majority Leader Harry Reid of Nevada and Chuck Schumer of New York, had quietly mounted a pressure campaign to keep Nelson from retiring. Nelson has more than $3 million in his campaign war chest, and his approval rating solidified after falling over the last several years. Nelson can give unlimited amounts to the DSCC from his reelection fund, Democratic sources noted.

Nelson, a Nebraska native and former insurance industry executive, had forged a reputation inside the Senate as one of the most moderate Democrats, sometimes to the frustration of his more liberal colleagues. He supported the Bush tax cuts in 2001, yet also backed President Barack Obama’s $787 billion stimulus package in 2009, as well as the Democrats’ signature health-care bill.

But with Nelson stepping down, the Democrats’ hold on the Senate is in serious doubt, although Democratic leaders believe they can still do so. Republicans are expected to pick up control of the Cornhusker State seat, although popular former Sen. Bob Kerrey (D) has been seen as a possible candidate to run again by top Democrats.

Other vulnerable Democrats like Sen. Claire McCaskill (Mo.) and Jon Tester (Mont.) also face difficult — although winnable — reelection fights.

Read more here.

For the third time in four weeks, Senate Republicans on Thursday voted in unison to block a piece of President Obama’s jobs package.

The GOP senators were joined by one Democrat, Sen. Ben Nelson (Neb.), and Independent Sen. Joe Lieberman (Conn.) in rejecting a procedural motion on legislation that would spend $60 billion on transportation infrastructure programs. The vote was 51-49.

The spending was offset with a new tax on income earned above $1 million that Republicans oppose.

Many Republicans, including Sen. Jeff Sessions (Ala.), said they favored the idea of patching up the nation’s roads, railways and bridges, but refused to agree to any tax hike.

“Sen. Reid comes in with a tax-increase plan, a big spending plan totaling $60 billion, and we are supposed to pass this?” Sessions asked prior to the vote Thursday.

Read more here.

The debate thus far has been framed primarily as a fight between those who want tax cuts for the middle class, versus those who want them for everyone (including wealthy Americans).

However, as with the health care debate, there is some prospect, political analysts say, that the debate could morph into a discussion of whether the Obama administration’s preferred policy would hammer one of the nation’s most coveted voting blocs– senior citizens– and in a circumstance in which Democrats have limited options for pushing back on Republican attacks.

According to IRS data analyzed and published in July this year by the Tax Foundation, “taxpayers over age 55 account for 71 percent of all dividend income earned. The lion’s share of dividend income – 48 percent – is earned by those over 65, and dividend income accounts for 6 percent of all the income earned by these taxpayers.”

Some opponents of Democratic plans to let some of the Bush tax cuts expire say that fact could be powerfully wielded by Republicans in states like Florida and Pennsylvania to hammer Democrats considered vulnerable by party leaders– and that it could give those Republicans an edge.  Without a legislative fix, at the end of this year, the 15 percent tax rate currently applicable to dividends would rise to as high as 39.6 percent for some dividend recipients.

“It’s not ‘Death Panels,’” said one Republican strategist.  “But it might be the equivalent of Medicare cuts.”

But unlike the debate over Medicare cuts, the fight over a possible hike in the dividend tax rate is one where Republicans have the advantage of advocating a position with which seniors are likely to agree on personal financial grounds, and one that is philosophically consistent with conservative principles.

“There’s no prospect of a hypocrisy charge here,” the above-quoted strategist continued.  “This is very clean from Republicans’ standpoint.”

CNN exit polling data from the last midterm elections in 2006 showed that voters aged 60 and older accounted for 29 percent of the electorate that year, so observers say it is little surprise that seniors would represent a desirable demographic to bring on board now.

Indeed, many candidates and political organizations are already focusing their messages on themes designed to appeal to seniors.  American Crossroads GPS– a 527 with which big names in GOP circles like Karl Rove and former RNC Chairman Mike Duncan are associated– has already run ads targeting Democrats over Medicare cuts in target states.  Party committees have been quick to point out Democrats’ defenses for those same cuts in statements to the media, as well.

Clint Stretch, managing principal for tax policy at Deloitte Tax, told the Hill newspaper that he anticipates that Congress will pass a one or two year extension of the full spread of Bush tax cuts in a post-election “Lame Duck” session.

Peter Orszag, President Obama’s former budget director, recently called for a two year extension of all of the tax cuts as well.

Graham also said Kagan “meets the test” the Framers envisioned for a Supreme Court Justice.

“I am going to vote for Elena Kagan because I believe constitutionally she meets the test the Framers envisioned for someone to serve on the Court,” said Graham. “I don’t think the Framers ever envisioned Lindsey Graham from South Carolina voting no because President Obama picked someone who is clearly different than I would have chosen.”

Sen. Graham was one of only five Republicans to vote to confirm Kagan to the Supreme Court. The other four were Senators Susan Collins of Maine, Judd Gregg of New Hampshire, Richard Lugar of Indiana, and Olympia Snowe of Maine. The Senate confirmed Kagan, 63-37, on Thursday, Aug. 5. Sen. Ben Nelson of Nebraska was the only Democrat who voted against the confirmation of Kagan.

The so-called revolt is comprised of three Democratic senators: Kent Conrad, Evan Bayh, and Ben Nelson. They want to extend all the Bush tax cuts. That includes taxes on the wealthy, or the top personal tax rate, the investment taxes on capital gains and dividends, and the estate tax.

So is this revolt a game-changer, or merely wishful thinking?

With a strong pushback against the revolt by President Obama, Treasury man Tim Geithner, and House Speaker Nancy Pelosi, right now it looks like wishful thinking. But with Democrats getting badly paddled in various polls, you never know.

When Tim Geithner told me in a CNBC interview a few weeks ago about his 20-20 rule for the top tax rate on capital gains and dividends, I blogged that this was a good thing — in particular the story for dividend taxes, which could go to 39.6 percent. But no increase at all on investment taxes would be even better.

Let’s say you’re an investor who went long stocks in March 2009 and now has a long-term capital gain. You could sell right now at a 15 percent tax rate before it goes up to 20 percent. In a nutshell, this is the tax-hike story that has hung over the stock market this year like the proverbial Sword of Damocles. Year-end tax-related selling could still be in front of us.

So the liberal tax revolt is a very important issue for investors. It could mean a potential stock market rally in the second half of the year.

It’s also important for job seekers. Just take a look at the new Investor’s Business Daily poll by the accurate surveyor Raghavan Mayur. He notes that the average length of joblessness has soared to over 35 weeks, nearly two-times greater than the previous high for any downturn. And his polling data show that nearly one-half of households can be categorized as “job-sensitive.” That’s a huge number. These are the people who are either looking for work or fear that they may be laid off — or both.

Regarding the direction of the country, confidence in the job market, the likelihood of a second recession, and satisfaction with federal economic policies, Mayur’s polling shows that the large job-worrying population is extremely pessimistic. Come November, that’s going to translate into votes against the Democratic Congress. And this pessimistic, jobs-sensitive group is undoubtedly thinking, along with the tax-hike-revolt Democratic senators: What sense does it make to raise taxes on anyone? Or on any business, large or small?

Then there’s the confidence-threatening war between business and the White House, which is also related to the liberal tax revolt. It’s still a battle royale between the nation’s business leaders and the administration over taxes, spending, regulation, and trade.

Treasury man Geithner made lite of this war at a Christian Science Monitor breakfast this week. A Daily Caller headline read: “Geithner Bored by Complaints from Business about Obama Policies.” White House chief of staff Rahm Emanuel also doesn’t seem that concerned. In a Wall Street Journal interview with Jerry Seib, Emanuel was a bit more conciliatory about reexamining regulatory issues, but he was still inconclusive.

There are two big things that businesses want right now: One is an across-the-board corporate tax cut, including cash expensing for investment. This is the single most powerful job-creator of all. The other is a senior business executive in one of the key economic policy slots in the White House. Neither of these requests seems to be on the table. But to conclude that the White House is burying the hatchet with business you’d have to see these conditions met.

So far it ain’t happening.

Among its horrors are a massive new consumer agency with the power to track virtually every financial transaction to share with other big agencies like the IRS, onerous new restrictions on angel investors and venture capital that greatly delay funding promising startup firms, proxy access provisions that would federalize state incorporation laws and empower unions and other progressive shareholders to wage director campaigns at the company and other shareholders’ expense, and no attempted reform of the government-sponsored enterprises Fannie Mae and Freddie Mac at the center of the financial mess.

But the most destructive portions of the bill — the one that would in my judgment go beyond even Obamacare in making the American free enterprise system unrecognizable — has been little discussed even by critics of this bill. To put it bluntly but absolutely accurately, this bill sets up a mechanism for the Treasury Secretary, the Federal Reserve, and the Federal Deposit Insurance Corporation to nationalize virtually any business they deem to be a threat to American “financial stability.”

I include myself among these critics not focusing on this issue and I apologize for not informing readers sooner, but I wanted to be sure the bill would do what I suspected it would do. Many of the bill provisions are interconnected, and what can seem like a mild measure by itself becomes lethal when combined with another sections. As Financial Times columnist Gillian Tett recently wrote: “Buried in [the bill’s] pages are numerous clauses and sub-clauses, many of which have been largely ignored until now (partly because they strike most non-financiers as pretty dull). Yet, the fine print could turn out to be crucial in the coming years.”

And after reading and rereading the “fine print” of this 1336-page piece of legislation (which will grow by hundreds more pages when amendments are added), it is clear that the bill’s “orderly liquidation authority” would facilitate outright government seizure of a wide variety of firms with very limited judicial review.

The first clue of what the bill would do in this regard comes from one of the bill’s architects. House Financial Services Committee Chairman Barney Frank, author of the similar financial bill that passed the House in December, has freely used the term “death panels” to describe the new powers the bills give the government over firms. In response to charges of “death panels“ in the health care bill, Frank responded that the panels were in the wrong bill. “Yes, we have death panels, but they got the death panels in the wrong bill,” Frank said on the House floor. “The death panels are in this bill.”

Defending against charges that the bills’ new mechanism to wind down firm will lead to taxpayer bailouts, Frankwrote in the Huffington Post that under this authority, “Shareholders are wiped out, unsecured creditors are out of luck, management and every employee that is not required to shut down the company is fired.” What Frank and other of the bills’ architects don’t say — not even in liberal venues like the Huffington Post — is that the bills also give the government these same powers to take over firms not seeking any kind of government aid.

Section 203 of Title II of the bill empowers the Secretary of Treasury, with a two-thirds vote from the Federal Reserve and the Federal Deposit Insurance Corporation, to take into government “receivership” any “financial company” whose failure he determines “would have serious adverse effects on financial stability in the United States. “

Once the Treasury Secretary puts the company into “receivership” of the FDIC, the government may — under Section 210 — “take over the assets of and operate the covered financial company with all of the powers of the members or shareholders, the directors, and the officers of the covered financial company, and conduct all business of the covered financial company,” “perform all functions of the covered financial company, in the name of the covered financial company,” and “ provide for the exercise of any function by any member or stockholder, director, or officer of any covered financial com1pany for which the Corporation has been appointed as receiver under this title.”

The ostensible “purpose” of this “orderly liquidation authority,” as stated in Section 204, is to “provide the necessary authority to liquidate failing financial companies that pose a significant risk to the financial stability of the United States.” Yet the funny (or not-so-funny) thing is that firms don’t really have to be “failing” to be taken over.

The Treasury Secretary can seize, under Section 203, any firm “in default” or “in danger of default.” And it’s clear that this “danger of default” does not need to be an immediate danger. The word “likely” appears many times in this section’s listing the criteria of a firm that can be taken over. A company can be in danger of default if “the assets of the financial company are, or are likely to be, less than its obligations to creditors and others; or the financial company is, or is likely to be, unable to pay its obligations [emphasis added].” The word “likely” itself is never defined, so up to the Treasury Secretary and Federal Reserve to make that determination.

Pretty dramatic new powers, huh? But, of course, most businesses won’t have to worry because this just affects “financial companies” like investment banks, right? Not exactly. “Financial company” is defined very broadly in Title II, as in other sections of the bill.

Recall that for purposes of Federal Reserve regulation and paying assessments for bailout of failed firms (though now after the failure, rather than through the $50 billion bailout fund that Dodd agreed to get rid of after to GOP mini-filibuster, a slight improvement), a “nonblank financial company” is defined as a firm “substantially engaged in activities in the United States that are financial in nature.” (See my previous piece, “The Obama-Dodd-Frank-Everything’s-A-Bank-Bill.”)

Also, last week orthodontists visited Capitol Hill because they were concerned that they would be subject to the new Bureau of Consumer Financial Protection if they offer installment plans for their patients to pay for braces. Dodd denied this, but a Bloomberg story pointed that the bill’s language grants jurisdiction to the bureau over any business that is “engaged significantly in offering or providing consumer financial products or services,” and the term “significantly” isn’t defined.

Similarly, under the definitions Title II, a “nonbank financial company” supervised by the Federal Reserve would be subject to the “orderly liquidation authority.” So if the Treasury Secretary and the Federal Reserve decide that a manufacturer, retailer, or even an orthodontics practice “would have serious adverse effects on financial stability in the United States,” they have the authority to send it to what Frank calls the “death panel.”

The authors of this bill still, however, are still left with one pesky problem: the courts. There’s always the possibility that some “backward” judges might actually take the Constitution seriously and see such a government seizure as a violation of the Takings Clause of the Fifth Amendment, the Due Process Clause of the 14^th Amendment, the limitation of the federal government’s power in the 10^th Amendment, or numerous other constitutional provisions that protect contracts and property rights and separate America from Argentina and Venezuela.

To try to prevent constitutional and other challenges , Section 202 of the bill creates a three-judge “orderly liquidation authority panel” in the federal bankruptcy courts to rubber-stamp the government‘s actions. This court would have just 24 hours to review a government seizure and could only stop it if it found “substantial evidence” the seizure was justified. As Heritage Foundation regulatory scholar James Gattuso recently put it, this means “that the seizure must be upheld if the government produces any evidence in favor of its action.”

The bill even sharply curtails Supreme Court review to attempt to block constitutional challenges. “Review by the Supreme Court under this subparagraph, shall be limited to whether the determination of the Secretary that the covered financial company is in default or in danger of default is supported by substantial evidence,” says the bill on page 117.

Sen. Mark Warner, who was substantially involved in drafting the bill, said during a speech that “resolution should only be used as a last resort.” For those interested in freedom and true financial stability, stopping this bill’s creation of a resolution/nationalization authority — a power that should not to be given to the Obama administration or any administration regardless of party — should be the first resort.