December 14, 2019

Biofuels- Tax Issues; Farm Bill; Debt Action; Climate; and Biotech

Tax Issues: Political Background

David M. Herszenhorn and Sheryl Gay Stolberg reported in today’s New York Times that, “President Obama on Tuesday strongly defended his tax cut deal with Congressional Republicans against intense criticism from his own party, insisting it was ‘a good deal for the American people.’

“Struggling to ensure that the package would win approval, the White House deployed Vice President Joseph R. Biden Jr. to Capitol Hill in a bid to allay the concerns of Senate Democrats. Mr. Obama also held a news conference where, with uncharacteristic emotion, he suggested that liberals were unrealistic about what they could achieve in Washington and also slammed Republicans, at one point comparing them to hostage-takers.”

The Times article noted that, “But at the Capitol, Mr. Biden failed to convince many of his old Senate colleagues to line up behind the plan at a tense lunch meeting. In his pitch for support, he called it ‘a bad situation’ but ‘a good deal,’ participants said.

“While many Democrats in the Senate and House raged against the idea of continuing George W. Bush’s tax policies for two more years — and some voiced serious concerns about adding the $900 billion cost to the deficit — the package seemed likely to win approval provided that Republicans vote for it in big numbers, as party leaders predicted they would.”

Janet Hook, Jonathan Weisman and Patrick O’Connor reported in today’s Wall Street Journal that, “After hearing from Mr. Biden on Capitol Hill, Senate Budget Committee Chairman Kent Conrad (D., N.D.) said he was shelving deep reservations about the agreement adding to the deficit and would back the bill. ‘I am prepared to support this, because overall it is necessary,’ Mr. Conrad said. He foresaw no major obstacles to the agreement’s passage in the Senate.”

The Journal writers explained that, “On the Republican side of the aisle, Senate Minority Leader Mitch McConnell (R., Ky.) said he believed ‘the vast majority’ of GOP senators would vote for it. Sen. Joe Lieberman (I., Conn.), said he was confident the deal would pass the Senate.

Passions ran higher in the House, where the Democratic caucus is more liberal and opposition is strong to allowing the upper income brackets to be continued at current levels. Liberals were especially outraged by Obama’s decision to accept a GOP estate-tax proposal that critics believe is too generous to people with large inheritances.”

“While Republicans generally embraced the agreement, conservatives such as Sens. Jim DeMint (R., S.C.) and Tom Coburn (R., Okla.) were dismayed that the tax package wouldn’t require spending cuts to cover the cost of extending unemployment benefits,” the Journal article said.

John Stanton reported yesterday at Roll Call Online that, “Sen. Bernie Sanders on Tuesday denounced President Barack Obama’s deal with Republicans to extend the Bush-era tax cuts as a ‘moral outrage’ and reiterated his threat to filibuster the bill.”

And The Wall Street Journal editorial board opined today that, “[T]his deal is superior to anything we could have imagined six months ago. Much credit goes to Mitch McConnell and Senate Republicans for holding together against the class war attacks of Chuck Schumer and other Democrats.”

The Washington Post editorial board argued today that, “There are things to dislike in the tax deal reached between President Obama and congressional Republicans, and reasons to be nervous about it. But there are more reasons to support it, which is what we urge lawmakers to do.”

While the New York Times editorial board stated that, “If angry Democrats blow up the deal, they will be left vainly groping for something better in a new Congress where they will have far less influence than they have now. The middle class and the unemployed would be seriously hurt.”

Shailagh Murray and Lori Montgomery reported in today’s Washington Post that, “The next step for Obama will be identifying key Democrats in both chambers who can help push the package forward. For instance, Senate Majority Whip Richard J. Durbin (D-Ill.), a traditional ally, signaled in recent days that a compromise would be necessary – but he declined to comment Tuesday.”

Meanwhile, Reuters writers Kim Dixon and Richard Cowan pointed out yesterday that, “Economists reckon the compromise tax plan should eliminate uncertainty on tax policy, help reduce unemployment and raise economic growth in 2011.”

Tax Issues: Biofuels

Reuters writer Charles Abbott reported yesterday that, “Tax credits for ethanol and other biofuels were among issues under debate for a sweeping tax bill, Democratic senators said on Tuesday, with ethanol subsidies due to expire in three weeks.

“‘There are provisions not yet included which I think are important,’ said Max Baucus, chairman of the Senate’s tax-writing committee. Asked about a possible 36-cent a gallon tax credit for ethanol, Baucus said, ‘I don’t know yet.’”

Mr. Abbott explained that, “Ethanol supports cost about $6 billion a year. The cost would drop to $3.6 billion in 2011 under the Baucus package.

North Dakota Sen Kent Conrad, chairman of the Budget Committee, said the situation on ethanol supports was unclear. ‘We’ll have to await further details,’ he said.

Two other senators said it was not clear if the biofuels extension was agreed or the support rate for it. Ethanol trade groups said the issue, and other business taxes, were left to Congress to settle in the wake of accord between President Barack Obama and congressional Republicans on estate and income taxes.”

Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “The tax legislation that congressional Republicans and the White House have agreed to will include extensions of the biodiesel and ethanol subsidies through 2011, says Iowa. Charles Grassley, the ranking Republican on the Senate Finance Committee. The $1-a-gallon biodiesel subsidy, which lapsed at the end of 2009, would be retroactive to this year, he said.”

Mr. Brasher pointed out that, “If Congress does extend the biofuels subsidies temporarily, lawmakers will have to decide what to do with them again next year. Grassley said he would consider a proposal by the ethanol industry group Growth Energy to phase out the subsidy for that gasoline additive and use the money for the pumps, pipelines and other infrastructure needed to distribute ethanol.”

( Note: Recall that back in July, this Growth Energy proposal was met with some skepticism from other renewable energy and commodity groups).

Mr. Brasher added that, “Grassley wasn’t sure if the tax agreement would extend the ethanol tax credit at its current level – 45 cents per gallon – or reduce it. Grassley said the subsidy should stay at 45 cents, but there have been proposals in the House and Senate this year to reduce it to 36 cents. Industry officials also were trying to confirm details today.

“‘It’s extremely important that this policy move forward so that honest and good-faith discussions about how you reform it can occur next year,’ said Matt Hartwig, a spokesman for the Renewable Fuels Association. His group argued that the Growth Energy proposal to convert the tax credit, known by the acronym VEETC, into subsidies for infrastructure was premature this year.”

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Any tax bill should keep the ethanol blenders credit at 45 cents a gallon rather than cutting it to 36 cents as was included in an earlier proposal, one of ethanol’s biggest supporters in the Senate said Tuesday.

“Senate Finance Committee Ranking Member Charles Grassley, R-Iowa, praised the proposed tax agreement between President Barack Obama and congressional Republicans as a plan that could pull the country out of the recession. But, an actual bill still needs to be drafted and put forward, he said.”

Tax Issues: Estate Tax

Ken Anderson reported yesterday at Brownfield that, “The tax deal between President Obama and Congress includes raising the estate tax exemption to five million dollars with a maximum tax rate on estates of 35 percent.”

American Farm Bureau President Bob Stallman indicated yesterday that, “The American Farm Bureau Federation applauds President Obama and congressional leaders for reaching an agreement on a framework for extending tax breaks for families at all income levels for two years. Farmers and ranchers are pleased the accord includes estate tax relief that establishes a $5 million estate tax exemption and a maximum rate of 35 percent.”

And Ron Hays of the Radio Oklahoma Network reported yesterday that, “Mary Kay Thatcher of the American Farm Bureau calls the [estate tax] announcement ‘pretty amazing’ as she adds that ‘I never would have bet that we could get two year extension with 35% rate with a five million dollar exemption per person.’”

To listen to an audio interview with Ron Hays and Mary Kay Thatcher on this issue, just click here.

However, Russell Berman and Mike Lillis reported yesterday at The Hill Online that, “Speaker Nancy Pelosi (D-Calif.) on Tuesday escalated the Democratic criticism of the agreement and said the estate-tax provision was ‘a bridge too far.’”

Farm Bill

Mary Kay Thatcher was also a guest on Monday’s AgriTalk Radio Program with Mike Adams, where among other issues, she discussed issues associated with the next Farm Bill.

In this audio clip from Monday’s AgriTalk show (MP3- 5:52), Mr. Adams and Ms. Thatcher highlight budget issues, EPA concerns, the food safety bill, as well as the Farm Bill and crop insurance.

In part, Ms. Thatcher noted that, “The other thing that is going to be very interesting about this Farm Bill is that for the first time ever crop insurance is going to be linked in. We have always done crop insurance separate from the Farm Bill, but now, the programs operate so similarly in many respects- and that is where the money is- that I think we have got them inextricably linked and this will be a ‘Farm Bill – Crop Insurance Bill’ for a long time to come.”

Meanwhile, a news release last week from the Colorado Farm Bureau indicated that, “Delegates to the 2010 Colorado Farm Bureau Annual Meeting last month approved a policy that supports the elimination of direct payments in the 2012 Farm Bill. The policy favors an expanded revenue insurance program and improved risk management tools.

“‘Our delegates decided that the industry needs to make tough decisions like these. I think they did the responsible thing,’ said CFB President Don Shawcroft.”

The release noted that, “Nathan Weathers, President of Yuma County Farm Bureau where the policy originated says that the ag industry needs to do its part in contributing to the reduction of the federal debt.

“‘Crop Insurance is a true safety net for farmers. By moving away from a direct and counter-cyclical program to a more comprehensive crop insurance program, we want to demonstrate our willingness to work together to cut the budget during tough economic times.’

“He also says that this change in direction shows that farmers are not looking for a handout from the taxpayers.”

In other news, an update posted yesterday at the American Prospect Online noted that, “When Congress returns in 2011, the chair of the Senate Committee on Agriculture Nutrition and Forestry will be filled by a woman for only the second time in history. Sen. Debbie Stabenow, who is replacing Sen. Blanche Lincoln, will be the first chair from Michigan, and advocates for food-policy reform hope her history and the needs of her state could mean a chair willing to chip away at the massive subsidies for commodity crops, like corn, that have shaped American agriculture for generations. The farm bill is due for reauthorization next year, and Stabenow has a chance to shape it and guide agricultural policy in a new direction. Of course, that hope is a slim one; food policy has, so far, been resistant to change.

“Stabenow, who became the first woman elected to represent Michigan in the Senate, has been a rank-and-file member of the committee since she joined the Senate in 2000. Agriculture makes up about a quarter of the state’s economy, and its varied crop yield makes it the second-most diverse farm state after California. Stabenow’s constituents want her to focus on crops like fruit and vegetables, which are often grown by smaller-scale producers and get very little federal support.”

Yesterday’s update added that, “With Stabenow at the helm of the Agriculture Committee, the initiatives she’s worked for — those that support small farmers, selling crops locally, and rural producers — and for which the Obama administration has also voiced support, might actually turn into law. ‘She’s got a long-standing interest in many of the issues we work on and think are key,’ [Ferd Hoefner of the National Sustainable Agriculture Coalition] says. ‘That bodes well for a fair discussion.’ But Stabenow has made compromises that give some food advocates pause. In 2002, she voted to limit the payments made to large-scale industrial agriculture but reversed that position in the 2008 farm bill in exchange for financial support for farmers who grow fruits, vegetables, and other small-scale crops.”

The American Prospect item stated that, “Still, given the other choices for chair — like Sen. Kent Conrad of North Dakota, one of the country’s top wheat producing states, or Tom Harkin of Iowa, who supports subsidies for biofuel crops like corn and soy — Stabenow was likely the best option from the perspective of local-food advocates. Even if her leadership doesn’t produce a farm bill that finally cuts wasteful subsidies and produces a more balanced agricultural system, the appointment of a senator who isn’t from a farm-belt state is an important one, at least symbolically.”

Debt Action

Erik Wasson and Sam Youngman reported yesterday at The Hill Online that, “Negotiations between Democrats and Republicans on reducing the deficit are being put on ice until the spring after President Obama’s fiscal commission failed to reach consensus last week.

“Sen. Kent Conrad (D-N.D.) is pressing for a bipartisan summit on the issue, but sources tell The Hill this is unlikely, if it happens at all, until the federal government reaches its debt ceiling in the spring.”

Climate Issues

John M. Broder reported in today’s New York Times that, “The United States and China have significantly narrowed their differences on the verification of reductions in greenhouse gas emissions, officials said, providing hope that a United Nations conference here on climate change can achieve some modest success.

“The verification issue, which cuts deeply on matters of national sovereignty and international trust, was a major factor in the torpedoing of last year’s climate negotiations in Copenhagen. But China has since significantly softened its position and the United States has moderated its insistence on the issue.

The reduced friction between the two nations has greatly improved the mood here, and envoys from both expressed guarded optimism that a deal could be reached by the end of the conference on Friday.”

And Ben Geman reported yesterday at The Hill’s Energy Blog that, “Sen. Jay Rockefeller (D-W.Va.) is pinning his hopes for blocking Environmental Protection Agency climate change rules on the highly uncertain prospect that lawmakers will move a massive omnibus federal spending package this year.

“Majority Leader Harry Reid (D-Nev.) earlier this year said he would give Rockefeller a vote on the West Virginian’s proposal to freeze looming EPA regulations covering power plants, refineries and other industrial plants for two years.

“But Reid has since equivocated, and Rockefeller faces a number of hurdles. Rockefeller told reporters Tuesday he still believes Reid wants to allow the vote, and that including the measure in a catch-all spending bill is the best option.”


DTN Ag Policy Editor Chris Clayton reported yesterday that, “The Ninth Circuit Court of Appeals has issued a temporary stay blocking a federal judge’s order to destroy Roundup Ready sugar beet seedlings.

“The Ninth Circuit order stays any potential action in the case until at least Dec. 23. Yet, it appears that order may carry on longer. The appeals court has already set a briefing schedule for both sides in the case that will carry at least through late January.

“U.S. District Judge Jeffrey White issued a preliminary injunction last week requiring four companies holding permits from USDA to grow Roundup Ready stecklings, or seedlings, to ‘plow under the stecklings’ by no later than the afternoon of Dec. 14.”

Keith Good

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