On Thursday, the House finally passed the farm bill, which provides funding for agriculture and nutrition programs—but only after Republicans stripped out all provisions concerning the $80 billion-a-year food stamp program.
The massive, five-year farm bill failed to pass the House in late June because conservative Republicans thought that the bill's envisioned cuts to the food stamp program ($21 billion over 10 years) wasn't enough, and Democrats thought it was far too much. The GOP devised a plan to pick up more votes by dividing the legislation, aiming to give the farm provisions a better chance of passage by splitting them from the controversial food stamp provisions. Meanwhile, GOP leaders hoped to garner more conservative votes for the nutrition bill by turning it into a vehicle to make further cuts to food stamps.
So far, their plan is working. The farm bill sans food stamps passed on a party-line vote of 216 to 208, with only 12 Republicans voting against. (Next, Republicans will draft up a separate food stamp bill.)
The President of New York City's Food Bank, Margarette Purvis, slammed the split bill as an attack on the needy, saying it would leave "the fates of 47 million Americans in limbo. This is a sad statement of the priorities of the leadership of this House of Representatives," she continued. "We need Congress to pass a farm bill that reduces hunger, not one that puts billions of meals at risk for the most vulnerable among us—especially when need remains so high."
Rep. Rosa DeLauro (D-Conn.) echoed this Thursday. "A vote for this bill is a vote to end nutrition in America," she said.
Sen. Elizabeth Warren (D-Mass.) and a bipartisan group of senators introduced a bill Thursday that would break up the nation's biggest banks, forcing them to split their routine commercial banking operations from their risky trading activities.
The 1933 Glass-Steagall Act, which Congress passed in response to the 1929 financial crash, separated traditional commercial banks—which hold Americans' checking and savings accounts and are backed by taxpayer money—from investment banks, which make riskier bets. But in 1999, the Gramm-Leach-Bliley Act—which was backed by the Clinton administration—gutted this law. A bonanza of bank mergers ensued, and the size of these new behemoths, such as Citigroup, JP Morgan Chase, and Bank of America, made their downfalls more threatening to the overall US economy. Their too-big-to-fail size justified the government bailouts they received during the last financial crisis. The senators behind this new bill—a group that includes John McCain (R-Ariz.), Maria Cantwell (D-Wash.), and Angus King (I-Maine)—refer to their legislation as the 21st Century Glass-Steagall Act because it would reinstate a firewall between normal banking functions and casino-like finance. By cutting the big banks down to size, the bill would reduce the potential impact of a bank failure on the wider economy and decrease the size of future bailouts.
"Since core provisions of the Glass-Steagall Act were repealed in 1999, shattering the wall dividing commercial banks and investment banks, a culture of dangerous greed and excessive risk-taking has taken root in the banking world," McCain said in a statement. "Big Wall Street institutions should be free to engage in transactions with significant risk, but not with federally insured deposits."
There was pressure to resurrect Glass-Steagall after the 2008 financial crisis, but the final 2010 Dodd-Frank financial reform law did not include such a provision. Dodd-Frank aimed to address the too-big-to-fail problem by forcing Wall Street to limit its risk-taking. These senators maintain that's not sufficient.
"Congress must take additional steps to see that American taxpayers aren't again faced with having to bail out big Wall Street institutions while Main Street suffers," King said.
This bill, if passed and enacted into law, would not fully remove the the threat of too-big-to-fail. None of the institutions that failed in 2008, such as Lehman Brothers and American International Group, were commercial banks. "But, it would rebuild the wall between commercial and investment banking that was in place for over 60 years," McCain said, "restore confidence in the system, and reduce risk for the American taxpayer."
On Tuesday, Republicans discussed the strategy with House agriculture committee chair Frank Lucas (R-Okla.); the idea is that splitting the bill up would give the farm provisions a better chance of passage since they wouldn't be attached to the controversial food stamp provisions. At the same, time, the GOP would be able to garner more conservative votes for the nutrition bill by making further cuts to the food stamp program. The plan "would take the SNAP bill farther to the right and make bigger cuts," Robert Greenstein of the liberal Center on Budget and Policy Priorities (CBPP) told the National Journal.
But a House food stamp bill with, say, $30 billion in cuts wouldn't be the main problem. The problem is that this kind of draconian bill wouldn't pass the Senate, which passed a farm bill with a mere $4 billion in nutrition cuts. That means the food stamp program would end up hanging around unauthorized (meaning it would continue to be funded at current levels through appropriations bills). That leaves the program vulnerable to other pieces of legislation, says Dottie Rosenbaum, an expert on food assistance at CBPP. There is a "lot of mega-legislation coming up," she adds, including a debt ceiling bill in September, and it's dangerous if "cuts are on the table."
"I worry that it sets the [food stamp] program up for a ceaseless attack over time because it is unauthorized," Greenstein told the National Journal. Especially since the GOP's ultimate goal, as laid out by Rep. Paul Ryan's (R-Wis.) most recent budget, is to cut food stamps by $135 billion over 10 years.
Top Dems on both the Senate and House ag committees slam the idea. Senate agriculture committee chair Debbie Stabenow (D-Mich.) told the Associated Press that cutting the bill up would be a "major mistake." Rep. Collin Peterson (D-Minn.), the top Democrat on the House ag committee, has said the idea is "stupid."
Anti-hunger advocates hope that the motley coalition wins out over slash-happy conservatives, and that food stamps will be saved for the time being. After all, "there is a history of food stamps and the farm bill being together. That process has resulted in a bipartisan moderate result," Rosenbaum says.
A farm bill that remains intact would in all likelihood still mean food stamp cuts. Just not Paul Ryan-sized cuts.
On Friday, a provision that financial reformers consider a critical part of the 2010 Dodd-Frank Wall Street reform act is set to finally go into effect. This measure was designed keep big banks from engaging in risky trading overseas that could contribute to another economic collapse at home—but Senate Democrats are sparring over whether it should be put into action.
The Dodd-Frank law, passed in order to avoid another financial crisis, requires Wall Street regulators to draw up tighter rules governing the trading of derivatives (financial products with values derived from from underlying variables, like crop prices or interest rates), and one question has been how these new standards will apply to US banks operating abroad. Advocates of financial reform contend these regulations must be strictly applied to the overseas trading activity of US banks. They note that Wall Street banks do more than half their derivatives dealing through foreign subsidiaries; if a bet in one of these foreign locations goes sour, the trading loss could come home to roost and threaten economic security in the United States. Foreign branches of US banks have so far been exempt from Dodd-Frank rules on derivatives, and Big Finance wants to keep it that way.
On Friday, the Commodity Futures Trading Commission (CFTC) is due to finalize a rule that will apply these strict regs on derivatives trading to overseas branches of US-based banks. But the agency's chief, Gary Gensler, is facing a crush of opposition from the financial industry and European banking regulators. And he's been getting conflicting messages from Senate Democrats. At the end of June, six Democratic senators—Chuck Schumer (D-N.Y.), Kirsten Gillibrand (D-N.Y.), Kay Hagan (D-N.C.), Michael Bennet (D-Colo.), Heidi Heitkamp (D-N.D.), and Thomas Carper (D-Del.)—sent a letter to the Treasury Department urging that the CFTC delay finalizing the guidelines on overseas trading. Last week, another eight Senate Democrats, including Elizabeth Warren (D-Mass.), Barbara Boxer (D-Calif.), and Jeff Merkley (D-Ore.), sent a letter to the CFTC pushing for a rule on overseas derivatives trades that is even stronger than the one Gensler has floated, and urging him to implement it soon.
Schumer & Co. argue that the CFTC should first coordinate its overseas rules with similar regulations being proposed by the Securities and Exchange Commission (SEC) and by banking regulators abroad. They say they merely want to protect banks from being subjected to "duplicative" rules. The senators insist they are pushing for a delay only to help banks make an orderly transition to new rules.
And waiting to coordinate US rules with foreign regulations is a fool's errand, financial reformers assert. European regulators are years behind the United States in developing derivatives regulations. "Rather than start to implement the strongest parts of Dodd-Frank, the finance industry and its supporters are pushing for endless delays, hoping people lose interest from exhaustion," says Mike Konczal, an expert on financial reform at the Roosevelt Institute. "This rule has been delayed enough already." (It was supposed to go into effect six months ago.) None of the six senators who are pushing for a delay responded to a request for comment.
Bart Naylor, a financial-policy advocate at Public Citizen, says that it's no surprise that Gillibrand and Schumer are urging a delay for this regulation; Wall Street is in their backyard. The Democratic senators pushing for slow-walking on the overseas rule took in an average of $1,879,161 in campaign contributions from the financial-services and banking industries in 2011 and 2012, according to campaign finance records compiled by the Center for Responsive Politics. The Senate Dems in favor of a strong cross-border rule banked an average of $592,696 from the industry.
The Elizabeth Warren camp is hoping Gensler will resist the anti-reform efforts and draft a strong rule by Friday. "The big banks should not be able to escape oversight just by conducting their derivatives trading through an offshore affiliate or branch. That makes no sense," Warren says. "We should learn from the mistakes that went wrong before the crisis, not repeat them."
The Obama administration is nearing the end of negotiations on one of the most far-reaching international free trade agreements in US history. The deal, called the Trans-Pacific Partnership (TPP), is aimed at boosting trade among 12 participating countries, and the next and final round runs July 15-24. The negotiations don't just concern the selling of shoes and toothpaste across borders; the trade deal, which will be the product of a three-year process, has the potential to affect many areas of American life. And because information on the negotiations is not public, it's hard to know what those impacts will be. Here's what we do know so far:
How will it affect US law? The agreement, which has a total of 26 chapters, could affect a host of policy areas, ranging from intellectual property rights to product safety and environmental regulations. Here's how: To make trade easier between countries with different sets of regulations, parties to international trade pacts have to bring their regulations into accordance with common international standards. This can lead to pressure to revise rules in areas like the environment and food and workplace safety in the United States, according to trade experts Josh Meltzer, professor of international studies at Georgetown Law School, and Susan Aaronsen, professor of international affairs at George Washington University. Once the agreement becomes international law, countries can also sue the United States for what they see as violations of the agreement, which can compel Washington to alter US law and regulations.
Trade deals always operate under a certain level of secrecy, trade experts say, which makes it easier for countries to negotiate amongst themselves without too much noise from advocacy groups and others inside countries. "That is how trade deals have worked…if they are made public, all interested groups can start tearing things apart before it's even done," says Bryan Riley, a senior policy analyst at the Heritage Foundation. But there is precedent for releasing proposed trade deal information to the public. A full draft text of the Free Trade Area of the Americas was released in 2001 during negotiations on that 34-nation pact; a draft text of the recently-completed Anti-Counterfeiting Trade Agreement was released; and the World Trade Organization posts negotiating texts on its website.