Farm Bill: Political Notes- Budget and Spending
Damian Paletta, Jonathan Weisman and Laura Meckler reported in Saturday’s Wall Street Journal that, “President Barack Obama will call for new government spending on infrastructure, education and research in his State of the Union address Tuesday, sharpening his response to Republicans in Congress who are demanding deep budget cuts, people familiar with the speech said.
“Mr. Obama will argue that the U.S., even while trying to reduce its budget deficit, must make targeted investments to foster job growth and boost U.S. competitiveness in the world economy.”
The Journal article explained that, “While proposing new spending, Mr. Obama also will lay out significant budget cuts elsewhere, people familiar with the plans say, though they will likely fall short of what Republican lawmakers have requested.”
The article reminded readers that, “In the House, Republicans are pushing to cut $100 billion from the annual budget as soon as this year. A coalition of House Republicans proposed Thursday cutting $2.5 trillion in spending over a decade, pushing nondefense discretionary spending down to 2006 levels for 10 years.”
Sheryl Gay Stolberg reported in today’s New York Times that, “Congressional Republicans, seeking to recapture the debate over the country’s economic recovery in advance of President Obama’s State of the Union address, warned Sunday that they would oppose any new spending initiatives and press ahead with their plans for budget cuts in every realm of government, including the military.
“In a series of carefully choreographed appearances on Sunday morning talk shows here [Washington, D.C.], Republicans sought to draw the battle lines for the Tuesday night speech over government spending. With Mr. Obama planning to call for ‘investments’ of tax dollars in specific areas like education, infrastructure and technology, Republicans insisted that ‘investment’ was just another name for spending that the nation can ill afford.”
“[House Majority Leader] Eric Cantor, said that his party would demand ‘deep spending cuts’ in all areas and that the military, an area of the budget that Republicans ordinarily view as sacrosanct, would not be exempt. ‘Every dollar should be on the table,’ Mr. Cantor said in an appearance on ‘Meet the Press’ on NBC.”
Jonathan Weisman reported in today’s Wall Street Journal that, “The White House and a bipartisan group of senators are focusing on restructuring the tax code and entitlement programs such as Social Security, which could have more dramatic impacts on the deficit in the long run but would do little in the short term. White House officials say Republican calls for $100 billion in spending cuts this year would choke off the economic recovery while doing little in the long run to tame the deficit.
“‘The American people say, don’t touch Social Security, don’t touch Medicare, don’t cut defense. That’s 84% of the federal budget,’ Senate Budget Committee Chairman Kent Conrad (D., N.D.). who is retiring when his term ends in 2012, said Sunday on ABC’s ‘This Week.’ ‘If you can’t touch 84% of the federal budget…you’re down to 16% of the budget at a time we’re borrowing 40 cents of every dollar we spend.’”
Amy Merrick reported in Saturday’s Wall Street Journal that, “Sen. Dick Durbin, a member of President Barack Obama’s deficit-reduction commission, said federal lawmakers should wait until the U.S. is clearly out of recession before making significant spending cuts to reduce the deficit.”
While, Steve Young reported on Saturday at the Argus Leader Online (South Dakota) that, “[GOP Sen. John Thune (SD)] said a looming vote on raising the federal debt limit above the $14.3 trillion cap is critical in bringing spending under control.
“Republicans vow not to vote to raise the debt limit unless there is a plan in place for dealing with long-term obligations, including Social Security, and for returning to 2008 spending levels.”
The “Washington Insider” section of DTN indicated in part on Friday (link requires subscription) that, “The [American Farm Bureau delegates who met recently in Atlanta] were especially concerned that farm program baseline funds might be diverted outside the ‘farm bill programs,’ the delegates said, and that the new bill should include direct payments, a simplified Average Crop Revenue Election program and the countercyclical, marketing loan and crop insurance programs. It is clear that at least some of the leadership of the new Republican majority in the House support that view, including Agriculture Committee Chairman Frank Lucas, R-Okla.
“At the same time, at least some of the spending implied by that baseline is being noted by budget hawks, especially payments that have averaged between $12.2 and $12.4 billion for the last three years. USDA says 91 percent of that spending was for four programs in 2010, the fixed direct payments ($4.8 billion), conservation payments ($3.1 billion), ad hoc emergency program payments ($2.8 billion) and the new ACRE program ($430 million). A number of farm groups have noted that the fixed direct payments are especially hard to defend during periods of high prices.
“Thus, some observers argue that it will be very hard to see how the new Republican majority in the House can propose deep budget cuts in other safety nets but not for agriculture.”
Farm Bill: Policy Focus
Tim Unruh reported in yesterday’s Salina Journal (Kansas) that, “So, if so many in agriculture are doing so well, why should taxpayers pay farmers to farm?
“Troy Dumler, of Garden City, has endeavored to answer that question. It arises — regardless of yearly receipts — every time a federal farm bill nears expiration. Arguments for and against create a gray cloud with no clear-cut justification, even for Dumler, a Kansas State Research and Extension agricultural economist.”
The article added that, “But the timing might be ripe for change.
“‘If it is the goal to reduce or eliminate subsidies, now is the time to do it,’ [Dumler] said. Those subsidies are between $12 billion and $13 billion a year.
“From 2005 to 2009 the average percentage of net farm income from federal conservation and commodity payments was 36 percent. That percentage has dropped to at or less than 20 percent in the past three years.
“‘We are earning significant returns from the marketplace,’ Dumler said, ‘and we’re less dependent on subsidies now.’”
Meanwhile, Jim Galloway reported on Friday at the Atlanta Journal Constitution Online that, “[Sen.] Saxby Chambliss [R-Georgia] on Friday said he intended to give up his status as ranking member of the Senate Agriculture Committee, swapping it for a similar position on the Senate Intelligence Committee.”
“But a leadership move from agriculture to intelligence would remove Chambliss from negotiations over the next farm bill in 2012 – sure to be marked by an intra-GOP fight over subsidies. ‘I did the last farm bill — carried the ball on it. And it’s probably time for somebody with other ideas to lead that process in 2012,’ Chambliss said.”
The AJC item quoted Sen. Chambliss as saying: “This is going to be the most difficult farm bill to write….First of all is the lack of money. We’re not going to have the funding that we have had in the past.
“Does that mean we eliminate subsidies? Probably not. We can’t do that and have a really good safety net out there for farmers. …I think the fight will be over direct payments. We get criticized for putting direct payments into a farm bill. And direct payments go to farmers whether they plant anything or not.
“I don’t like that concept philosophically, but one reason we have direct payments is, they’re the most [World Trade Organization]-compliant part of any farm bill. Every European country provides direct payments to their farmers.”
EPA- Environmental Protection Agency: Pesticide Issues
DTN writer Todd Neeley reported on Friday (link requires subscription) that, “Farmers could need pesticide application permits in less than three months when an Environmental Protection Agency rule takes effect.
“Yet, it remains unclear exactly what that means for farmers.
“Producers will face myriad state-level rules in response to EPA’s action — some producers will need permits, some farmers will pay fees, others will not.”
The article pointed out that, “Most state officials contacted by DTN said farmers who apply pesticides to row crops will not need permits when the EPA regulation takes effect April 9. In general, the regulations cover direct application to water.
“Farmers may need permits for pesticide used to kill weeds in ditches.
“The EPA program could affect about 365,000 pesticide applicators nationwide, including some 5.6 million pesticide applications annually, according to EPA estimates.”
Mr. Neeley explained that, “Officials in 44 states have or are developing programs in the National Pollutant Discharge Elimination System, or NPDES, in response to EPA’s rules. The other six states and territories are covered by EPA’s general permit.
“EPA was forced to create the program as a result of a 2009 decision by the Sixth Circuit Court of Appeals in the National Cotton Council v. EPA case. The court decided that EPA could not exempt pesticide users from Clean Water Act requirements.
“In that case, the court vacated EPA’s 2006 rule that said NPDES permits were not required for pesticides applications to, over or near U.S. waters, as long as they were in compliance with pesticide labeling required by EPA in the Federal Insecticide, Fungicide, and Rodenticide Act, or FIFRA.”
In a related item regarding the EPA, The Wall Street Journal editorial board opined today that, “President Obama’s executive order to sweep out the regulatory chimneys deserves the benefit of the doubt, if only on the chance that it does some modest good. But now that we’ve had a chance to inspect the fine print, there’s reason to believe this is less than meets the press release.
“No sooner had Mr. Obama told the bureaucracies to subject all regulations to a cost-benefit test than the bureaucrats began telling reporters that they are already a model of modern efficiency, thank you very much. Among many others, the Environmental Protection Agency said in a statement that it was ‘confident’ it wouldn’t need to alter a single current or pending rule. ‘In fact, EPA’s rules consistently yield billions in cost savings that make them among the most cost-effective in the government.’
“Perhaps the EPA’s confidence owes to a little-noticed proviso in Mr. Obama’s order. When the agencies weigh costs and benefits, the order says, they should always consider ‘values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts.’”
Trade- Mexican Truck Dispute
Julian Aguilar reported in yesterday’s New York Times that, “A provision in the original 1994 North American Free Trade Agreement would have allowed long-haul truckers from Mexico to move about the United States without mileage restrictions, but it was never put into effect. Today, tractor-trailers entering the United States from Mexico (and vice versa) are limited to traveling within a 20-mile to 25-mile radius of ports of entry. There, Mexican truckers must drop their goods, which are then picked up by American truckers to be transported to their final destinations.
“This month, the Obama administration issued what it called a ‘concept document’ addressing many of the concerns that have blocked full carrying out of the provision.
“In 2009, Congress and the administration ended a two-year-old long-haul pilot program.”
The article noted that, “After the pilot program ended, Mexico said the United States was in violation of Nafta and put more than $2 billion in tariffs on nearly 100 American products — including agricultural products like onions and peanuts — in retaliation.”
“‘Texas agriculture should not be penalized because Congress broke a 17-year-old agreement,’ [Texas Ag Commissioner Todd Staples] said. ‘I hope our trade negotiators cut a fair deal soon so Texas agriculture can continue to provide a safe, affordable food supply and good jobs for our citizens.
“Mexican officials have said the tariffs would be lifted if a long-haul trucking agreement were reached. Negotiations are expected to take several months.”
Reuters writer Tom Doggett reported on Friday that, “U.S. regulators on Friday backed a request [from March of 2009] that would sharply boost the use of corn-based ethanol in more than half the nation’s cars, elevating the stakes in a contentious debate over the safety and cost of converting more corn into fuel.
“The U.S. Environmental Protection Agency’s announcement boosting the ethanol blend rate in gasoline to 15 percent from 10 percent in vehicles built from 2001 to 2006 was not a surprise, coming just months after it allowed so-called E15 in cars and trucks built in 2007 or later.”
GOP Sen. James Inhofe (OK) indicated on Friday that, “In response to overwhelming concerns expressed by Oklahomans about ethanol, I will be reintroducing legislation addressing the lack of availability of ethanol-free gasoline. This approach will restore choice at the pump and allow fuel producers to respond to market demands-specifically, when and where consumers prefer clear gas.”
And The Wall Street Journal editorial board indicated on Saturday that, “The global economy is getting back on its feet, but so too is an old enemy: food inflation. The United Nations benchmark index hit a record high last month, raising fears of shortages and higher prices that will hit poor countries hardest. So why is the United States, one of the world’s biggest agricultural exporters, devoting more and more of its corn crop to . . . ethanol?… At a time when the world will need more corn and grains, it makes no sense to devote scarce farmland to make a fuel that exists only because of taxpayer subsidies and mandates. If food supplies tighten and prices keep rising, such a policy will soon become immoral.”
Bridget Johnson reported yesterday at the Hill’s Energy Blog that, “Sen. John McCain (R-Ariz.) sees an easy target in the drive to cut spending while leaving no ‘sacred cow’ untouched.
“‘Ethanol is a joke,’ he said Sunday on CBS’ ‘Face the Nation,’ saying that programs promoting the corn-derived fuel are wasting money.”
Emily Glazer reported yesterday at The Wall Street Journal Online that, “It’s getting pricier to throw some ribs and burgers on the grill. And you can blame the surging price of corn.
“That’s because much of the corn grown in the U.S. is used as animal feed. And ‘we’re using $6 corn to feed hogs right now,’ up from about $4 last year, says Michael Swanson, an agricultural economist at Wells Fargo in Minneapolis. ‘Either the hog guy is going to go out of business or you’re going to pay more for pork.’ So if you ‘want barbecue ribs,’ he adds, ‘you’re going to have an extra $10 attached to it.’”
The Journal article noted that, “Mr. Swanson expects retail food prices to rise between 3% and 4.5% this year, compared with 1.5% in 2010. And some products will be hit particularly hard.”
Tom Polansek reported in today’s Wall Street Journal that, “U.S. wheat exports are picking up as surging food prices become a growing concern for foreign governments.
“Buyers in North Africa and the Middle East boosted purchases of the U.S. crop following the ouster of long-standing Tunisian president, Zine El Abidine Ben Ali. Turkey and Jordan bought U.S. wheat last week, while Algeria made a large wheat purchase without saying from where. In Tunisia, the state grains agency snapped up supplies following recent unrest there.”
Chuin-Wei Yap reported on Friday at The Wall Street Journal Online that, “China’s grain imports made the largest gains by far among China’s commodity purchases last year, signaling higher demand and flush liquidity that analysts say is likely to pave the way for more imports this year.
“Led by a surge in corn shipments from the U.S., Chinese grain imports in 2010 surged as the rise of large-scale livestock farms and a shift in diet patterns dented Beijing’s policy of self-sufficiency in the sector.”
And Reuters writer Jonathan Lynn reported on Saturday that, “Export restrictions are a prime cause of current and recent surges in global food prices, and countries should find other ways to secure domestic supplies, the head of the World Trade Organization said on Saturday.”
Lyndsey Layton reported in today’s Washington Post that, “In response to a new federal food safety law and growing consumer interest, vast amounts of new data are being generated about the complicated path that food takes from field to supermarket shelf.
“And, increasingly, some of that information is being offered to curious shoppers, who in some stores can wave a smartphone above an apple or orange and learn instantly where it was grown, who grew it and whether it has been recalled. They can even contact the farmer, if they are so moved.
“A provision of the federal food safety law passed last year requires that all players in the country’s food supply chain be able to quickly trace from whom they received a food product and to whom they sent it. They’ll have to maintain that information in digital form, creating deep wells of information that, in some cases, consumers could tap into through their computers or cellphones.”