On Thursday morning, the Senate banking committee held a hearing on Janet Yellen's nomination to chair the Federal Reserve—the US central bank charged with keeping unemployment low and inflation in check. A telling moment in the hearing came when Sen. David Vitter (R-La.) asked Yellen, the Fed's current vice chair, when the central bank would wind down its powers to bail out banks, as required three years ago by the Dodd-Frank financial reform act. Yellen wasn't sure.
Between 2007 and 2009, the Fed doled out $16 trillion in cheap loans to big banks that were reeling from the global financial crisis. To prevent Wall Street from expecting this type of cash infusion in the future, Dodd-Frank restricted the kinds of emergency lending the Fed can do. But the Fed still hasn't crafted these general provisions into specific regulations limiting its powers—and until it does, it's free to do as it sees fit.
At the hearing, Yellen told Vitter that regulations limiting the Fed's bailout powers are still "in the works" and that she'd "try to get it out soon," but said she was "not certain what the time frame is." During questioning at a financial services committee hearing in July, Fed chair Ben Bernanke said the Fed had "made a lot of progress" on in crafting enforceable limits on its bailout powers, and that he hoped to have the final regulations out by the end of the year. Yellen's lack of an answer for Vitter's question suggests that year-end deadline may be off the table.
As I reported in July, financial reform experts think the reason the Fed is dragging its feet is obvious: the central bank doesn't want to cede any powers it may want to use in the future. It's easier for the Fed to hand out money than to upend the way it operates, Marcus Stanley, the policy director at Americans for Financial Reform, told me at the time.
The Fed could be busy with other matters, of course. But Yellen's lack of an answer suggests that limiting its own powers isn't "a high priority for the Federal Reserve," says Mike Konczal, a financial reform expert at the Roosevelt Institute.
Rep. Rosa DeLauro (D-Conn.) and Rep. Michele Bachmann (R-Minn.).DeLauro: James Berglie/ZUMA; Bachmann: Gage Skidmore/Flickr
The Obama administration is nearing the end of negotiations on the biggest free trade deal in US history, the Trans Pacific Partnership (TPP). The stakes are high: The pact affects the United States and 11 other countries, domestic policy areas ranging from intellectual property rights to product safety and environmental regulations, and $26 trillion in annual economic output. But in order to secure the deal, President Barack Obama says he wants Congress to grant him permission to sign the final trade agreement, which Congress has not yet seen, without lawmakers having an opportunity to make any changes to the pact. A coalition of about 174 conservative Republicans and liberal Democrats in the House signaled this week they would likely vote against giving those trade powers to the president.
The US trade representative Michael Froman and Obama want to finalize the TPP by the end of the year and are pushing Congress to pass legislation soon that grants the president something called fast-track authority, which would allow him to sign the final trade agreement without Congress making any amendments to the pact. If Obama gets what he wants, Congress may not even be able to read the final version of the massive trade deal in its entirety until after lawmakers have signed away their rights to influence it. At that point, the two chambers will only be allowed an up-or-down vote to implement the international pact into domestic law. The administration says fast-track authority will assure other countries that the deal the United States has committed to after three years of negotiations won't be dismantled by American lawmakers who dislike some of the provisions. No major trade agreement has been finalized without it.
The food stamps program—which helps feed 1 in 7 Americans—is in peril. Republicans in the House have proposed a farm bill—the five-year bill that funds agriculture and nutrition programs—that would slash food stamps by $40 billion. But by taking advantage of House Republicans' desire to cut food stamps as much as possible, Democrats might be able to prevent cuts from happening at all.
To pull it off, Democrats would have to derail the farm bill entirely, which would maintain food stamp funding at current levels. Here's how it would work, according to House Democrats who've considered the idea.
It's an idea rooted in the last food stamp fight: In June, the House failed to pass a farm bill that cut $20 billion from the food stamp program. The bill went down because 62 GOP conservatives thought the $20 billion in cuts weren't deep enough, while 172 Democrats thought they were too drastic. After the bill failed, House conservatives passed a much more draconian food stamps bill with $40 billion in cuts. But that bill was dead-on-arrival in the Democrat-controlled Senate.
That means Boehner is going to need some Democratic votes. His problem is the same as it was in June: math. He needs 216 votes to pass a bill. In June, 62 Republicans voted against a bill with $20 billion in cuts. If Boehner loses the same 62 Republicans this time around, he'll need at least 47 Democrats to vote yes. But just 24 Democrats voted for the June bill. So Boehner will likely have to introduce a bill with lower cuts—costing him more Republican votes. The more Republicans Boehner loses, the more Democrats he'll need.
And as Boehner saw in June, winning House Democrats' votes for a bill that slashes food stamps by billions of dollars is a heavy lift—after all, if no farm bill passes, food stamps spending would remain at current levels. Why compromise when you can win by doing nothing at all? "It would make sense," emails a House Democratic aide, "for progressives to vote against [the farm bill]. Makes me think of this":
Some House Democrats are already publicly skittish about voting for any level of food stamp cuts. "Many progressive members of Congress, especially those of us who represent areas with high levels of unemployment and food insecurity, may have a hard time voting for additional cuts to federal nutrition programs," Rep. John Conyers (D-Mich.), the ranking member of the powerful judiciary committee, explained in an email. A staffer for Rep. Jim McGovern (D-Mass.), who is part of the farm bill negotiating committee, says the congressman is "willing to compromise," but "will not vote for a bill that makes hunger worse in America." A staffer for Rep. Rosa DeLauro (D-Conn.) says that the lawmaker doesn't want to get into "hypotheticals," but that DeLauro does not support any further cuts to the food stamp program.
All this leaves Nancy Pelosi (D-Calif.), the Democratic minority leader, in the driver's seat. If she wants to deliver 75 or 80 Democratic votes for a farm bill that cuts food stamps, she probably could. But so far, she hasn't committed to asking her caucus to vote for a farm bill—even one with lower cuts. And she's already demonstrated that she can unify her caucus against a farm bill with cuts she thinks are too deep. Without Pelosi pushing for a yes vote, a compromise farm bill could go down again.
Stopping the farm bill could backfire on Dems. If the bill passes, the funding levels it sets for food stamps would be locked in for the next five years. But if the bill doesn't pass, Republicans on the appropriations committee would have to approve continued funding for food stamps. Usually, appropriators from both parties simply continue funding programs at previously authorized levels unless or until the law changes. However, they do technically have the power to refuse to approve new funding. That scenario "is pretty much unthinkable," though, argues another Democratic aide.
New legislation could also end up shrinking the food stamp program—without a five-year bill locking in current funding, a future budget deal could more easily include food stamp cuts.
If Dems succeed in piggybacking on Republican opposition, and kill the farm bill, other important programs and key agriculture reforms will be neglected. Funding for conservation programs and for organic and small farms would dry up, for example. Wasteful subsidies to Big Ag would continue. But these things "are not life or death" like food stamps are, argues the second Dem staffer.
Conyers feels the same way. "As much as I support some of the needed reforms to wasteful direct payment programs and subsidized crop insurance," he says, "I'm not willing to balance our budget by taking food out of the mouths of children."
Republicans will salute America's veterans Monday, while simultaneously trying to deny them benefits. In addition to reducing housing aid, and denying health care to vets, the GOP is also trying to remove thousands of vets from the food stamp program, known as the Supplemental Nutrition Assistance Program, or SNAP.
At least 900,000 veterans rely on SNAP. The House Republican version of the farm bill, the five-year piece of legislation that funds nutrition and agriculture provisions, would slash funding for the food stamps program by nearly $40 billion and boot 2.8 million people off the program next year. That includes 170,000 veterans, who would be removed through a provision in the bill that would eliminate food stamps eligibility for non-elderly jobless adults who can't find work or an opening in a job training program.
This month, SNAP funding was reduced by $5 billion as extra stimulus money for the program expired. While the Senate will never approve the $40 billion in further cuts to the food stamps program that House Republicans want, deeper cuts are pretty much inevitable. The two chambers are in the middle of negotiating a final version of the farm bill, which will contain food stamp reductions somewhere in between the $4 billion level the Senate wants and the level the Republicans want.
Whatever the final number, veterans will likely feel the pinch.
Even though jobs were added, the unemployment rate increased a tenth of a percentage point to 7.3 percent. This is because of the way job growth is tallied. As Catherine Rampell explained at the New York Times last month:
The jobs report is based on two different surveys—one of households, and one of employers—and it turns out that furloughed federal government workers will be treated as unemployed in the first survey but employed in the second. In other words, the temporary layoff of federal workers will probably increase the unemployment rate, but not (at least directly) depress the payroll job growth numbers.