Noting an improving economic outlook, Federal Reserve Chairman Ben Bernanke ended weeks of speculation Wednesday, saying the Fed will likely slow its bond-buying program later this year -- and end it in 2014 -- IF the recovery continues. While that may seem like a positive development, the mere suggestion that the “Fed Gravy Train” may be coming to an end roiled markets all over the world.
A global sell-off that began in Asia quickly spread to Europe and then the U.S., where the Dow Jones industrial average fell 560 points Wednesday and Thursday, wiping out all of its gains during May and June.
But the damage wasn't limited solely to stocks. Bond prices also fell, as did commodity prices. Gold and silver plummeted to their lowest levels since 2010. Crude oil had its largest single-day decline since November and grain prices also caved to the bearish sentiment gripping the markets.
The question now is whether the plunge was an overreaction or an indication of further volatility in the days ahead. And Agricultural traders received a second helping of uncertainty Thursday when House lawmakers rejected the Farm Bill.
“The yeas are 195, the nays are 234. The bill is not passed.”
And with that, the U.S. House of Representatives ended a marathon debate over the Farm Bill, as a $940 billion overhaul of agriculture and food assistance went down in defeat.
Sorting through 103 amendments proved to be an arduous task for the chamber, as alterations to the bill included everything from wildfire protection to growing industrial hemp for research, and even eliminating the National Sheep Industry Improvement Center.
Ultimately, three amendments may have killed the bill.
One adjustment would have placed tighter caps on government crop insurance subsidies. Another created the Dairy Producer Margin Insurance program. And the most contentious revision would have cut $20 billion in annual funding for the Supplemental Nutrition Assistance Program, formerly known as food stamps
Rep. Gwen Moore, D - Wisconsin: “SNAP is effectively targeted at our most vulnerable populations, primarily serving children, seniors and disabled in our poorest communities, people who cannot work.”
Rep. Reid Ribble, R – Wisconsin: “The data does not support on behalf of the taxpayer that we continue to increase funding for SNAP. And in fact, if you follow the red line, that’s unemployment, in America. You can see during the recession unemployment went up as did SNAP spending almost exactly at the same ratio. And then, almost as unemployment, as the economy began to recover, unemployment went down as did poverty, SNAP funding continued to go up.”
Rep. Jim McGovern, D - Massachusetts: “I’m concerned the rule makes in order several, quite frankly, mean-spirited amend that do nothing but demonize the poor and make their lives even more difficult.”
Rep. Pete Sessions, R Texas: “Those who are able bodied, those who really should be getting up during the day and trying to find work do not take government assistance.”
Rep. Rosa De Lauro, D - Connecticut: “I tell my colleague from Texas, if you want to find money in this budget, go to the crop insurance program which is ripping off billions of dollars from U.S. taxpayers that’s where the money is, not where the program is to feed our kids. Food Stamps are good for the economy. They get resources into the hands of families who spend them right away and most importantly they are the right thing to do.”
Rep. Mike Conaway, R - Texas : If you qualify on the income and assets side, you’ll stay on the program. If you make too much money, to qualify directly for Food Stamps, those folks will be getting as part of the $20 billion that we’ll save in this program.”
In the end, the opposition proved too much for the primary authors of the bill, Republican Frank Lucas of Oklahoma and Democrat Collin Peterson of Minnesota.
Sensing he lacked the votes necessary for passage, Lucas made a final, impassioned plea to his colleagues.
Rep. Frank Lucas, R - Oklahoma: “Assess the situation, look at the bill, vote with me to move this forward if you care about the consumers, the producers, the citizens of this country, move this bill forward.”
Nevertheless, 62 republicans joined 172 democrats in voting against the measure. Some said no because the cuts to SNAP were too severe. Other detractors felt the legislation didn’t cut federal spending enough.
Following the vote, the House Ag Committee Chairman issued this statement:
”I’m obviously disappointed, but the reforms in H.R. 1947- $40 billion in deficit reduction, elimination of direct payments and the first reforms to SNAP since 1996 - are so important that we must continue to pursue them. We are assessing all of our options, but I have no doubt that we will finish our work in the near future and provide the certainty that our farmers, ranchers, and rural constituents need."
Even if the Farm Bill had passed, it would have faced an uncertain future, since it would have needed to be reconciled with the Senate version to avoid a presidential veto.