Farm Bill: Budget Developments- President’s Perspective
Helene Cooper reported in today’s New York Times that, “President Obama will unveil a deficit-reduction plan on Monday that uses entitlement cuts, tax increases and war savings to reduce government spending by more than $3 trillion over the next 10 years, administration officials said.
“The plan, which Mr. Obama will lay out Monday morning at the White House, is the administration’s opening move in sweeping negotiations on deficit reduction to be taken up by a joint House-Senate committee over the next two months. If a deal is not struck by Dec. 23, cuts could take effect automatically across government agencies.
“Mr. Obama will call for $1.5 trillion in tax increases, primarily on the wealthy, through a combination of closing loopholes and limiting the amount that high earners can deduct. The proposal also includes $580 billion in adjustments to health and entitlement programs, including $248 billion to Medicare and $72 billion to Medicaid. Administration officials said that the Medicare cuts would not come from an increase in the Medicare eligibility age.”
Today’s article added that, “Mr. Obama’s proposal is certain to receive sharp criticism from Congressional Republicans, who on Sunday were already taking apart one element of the proposal that the administration let out early: the so-called Buffett Rule. The rule — named for the billionaire investor Warren E. Buffett, who has complained that he is taxed at a lower rate than his employees — calls for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers.
“That proposal, which was disclosed on Saturday, was met with derision Sunday by Republican lawmakers, who said it amounted to ‘class warfare’ and a political tactic intended to portray his opponents as indifferent to the hardships facing middle-class Americans.
“Representative Paul D. Ryan, chairman of the House Budget Committee and a leading proponent of cutting spending on benefit programs like Medicare, said the proposal would weigh heavily on a stagnating economy.”
Carol E. Lee and Damian Paletta reported in today’s Wall Street Journal that, “While some pieces of Mr. Obama’s plan may be agreed upon, Congress is unlikely to pass the package as proposed given Republican resistance to tax increases. Instead the plan marks the White House’s opening salvo in negotiations over the next two months on how to reduce the deficit. It is the president’s fourth package of deficit-reduction ideas this year.”
Zachary A. Goldfarb reported in today’s Washington Post that, “Obama will make his presentation Monday morning in the Rose Garden of the White House. He also may call for adjusting cost-of-living increases, scaling back farm subsidies and altering contributions to federal pensions.”
Meredith Shiner reported last night at Roll Call Online that, “On Capitol Hill, it’s unclear how seriously Obama’s speech will be received. Even Congressional Democrats were not given much advance notice, and the super committee’s job of finding at least $1.2 trillion in savings is difficult enough without voices from the White House tipping the delicate balance Democrats and Republicans must strike to avoid serious across-the-board discretionary cuts.
“‘It’s more of a box-checker than a game-changer,’ one Democratic leadership aide said of Obama’s speech when asked how it might affect the super committee’s work, adding that any influence the president would have on the group likely would come in concert with advice from Congressional leadership.”
Sam Youngman noted last night at The Hill Online that, “Administration officials said the proposal will pay for Obama’s $447 billion jobs plan while cutting $3 trillion in deficit spending over 10 years.”
Farm Bill: Budget Developments- Omnibus Bill, Continuing Resolution
Jake Sherman and John Bresnahan reported yesterday at Politico that, “House Republicans have backed themselves into a corner: How do they keep the government open and pass year-end spending bills without wrapping them all into a monstrous omnibus bill — just the kind that conservatives despise and Speaker John Boehner himself slammed when Democrats ran the House?
“But that’s exactly where Republicans are headed as the Sept. 30 end to the fiscal year looms, and Boehner may now have to rely on Democrats and the White House to pass an all-inclusive spending bill.”
The article explained that, “Boehner has yet to make a final decision on whether to push an omnibus bill, and House GOP leaders have not settled on exactly what would be in that package. House Appropriations Committee Chairman Hal Rogers (R-Ky.) has told POLITICO an omnibus bill is the only path open to the GOP leadership at this point and the proposal was brought up during a bicameral GOP leadership meeting last week. Rogers is expected to begin discussions this week on an omnibus package with his Democratic counterpart, Hawaii Sen. Daniel Inouye, chairman of the Senate Appropriations Committee.”
The Politico writers added that, “To buy time, the House will also take up a short-term continuing resolution that keeps the government open until mid-November while Congress finishes work on the 12 annual appropriation bills.
“The reality is that Congress and President Barack Obama spent most of the summer engaged in a bitter fight over the debt ceiling boost, pushing action on the annual spending bills until close to the fiscal year’s end. While the debt-limit agreement includes a top-line number for 2012 discretionary spending, how that translates into individual bills is still unclear.”
Farm Bill: Budget- Supercommittee Issues
Meredith Shiner reported today at Roll Call Online that, “Although members of the super committee expressed openness to tackling both taxes and entitlements during the group’s first two public hearings, almost all of them acknowledge that the road to any agreement will be difficult. And sources close to the committee suggest that any outside pressures, even from the president, will make that road much tougher.
“In that respect, the 12-member bipartisan, bicameral panel has started to create a bubble around its work. The panel’s lawmakers have kept extremely tight-lipped after leaving private meetings, and there has been little internal discussion of outside calls — from the White House or other policymakers — for them to include or exclude certain items. The panel’s co-chairmen, Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Texas), have said little about the panel’s goals beyond statements last week that they were ready to ‘seize the moment.’”
A news release from Sen. Saxby Chambliss (R-Georgia) late last week indicated that, “Today [Thursday, Sen. Saxby Chambliss], announced that he has organized and will help lead a bipartisan coalition of 36 U.S. senators who will encourage the members of the congressional ‘super committee’ to seek the broadest possible bipartisan agreement to address the nation’s deficits and debt. This group of 18 Republicans, 17 Democrats & 1 Independent builds upon Sen. Chambliss’ yearlong efforts, along with Sen. Mark Warner, D-Va., to craft a deficit and debt framework as the two co-founders of the Senate’s bipartisan ‘Gang of Six.’”
And Kevin Bogardus reported on Saturday at The Hill Online that, “National restaurant chain companies have targeted ethanol tax subsidies for slashing by the powerful group of lawmakers tasked with reducing the national deficit by at least $1.5 trillion.”
Farm Bill: Policy Issues
With this budget background in mind, Philip Brasher reported on Friday at the Green Fields Blog (Des Moines Register) that, “Some farm groups are rushing to put out ideas for overhauling farm subsidies as the congressional deficit-cutting supercommittee starts work.
“The National Corn Growers Association has a plan that would scrap the current system of fixed, direct payments and use the money both for deficit reduction and to expand the revenue-protection program known as ACRE that was created in 2008 [related discussion].”
Mr. Brasher added that, “Meanwhile, the American Soybean Association is getting some economic analysis done on ideas of its own to see how it works out for that commodity. The National Cotton Council announced in August that was working toward its own alternative [related discussion].
“The groups need to come up with ideas as soon as possible, because of the urgency of the deficit committee’s schedule, said John Gordley, a lobbyist for the soybean group. It’s possible that the committee could write a new, less costly farm subsidy program into its deficit-cutting plan, Gordley said in an interview. The House and Senate agriculture committees have until Oct. 14 to provide ideas to the supercommittee.”
“It could be easier to get Congress to pass a farm subsidy overhaul by going through the supercommtitee than waiting for lawmakers to try to write a new farm bill in 2012, a presidential election year, Gordley said. A standalone farm bill would need 60 votes to overcome a possible filibuster in the Senate, while the deficit plan will only need a simple majority. ‘The chances of getting 50 or 51 (votes) are a heck of a lot better than getting 60,’ he said.”
Also on Friday, Urban C. Lehner, the vice president in charge of editorial operations for DTN and the Progressive Farmer, indicated at his blog that, “Decades from now, farm-bill historians will look back on 2011 as ‘The Year of the Great Coincidence.’
“It was, they’ll say, the year deep budget cuts finally forced farmers to make hard choices, even as Mother Nature was reminding them of the importance of risk-management programs. Depending on how the remainder of the year unfolds, it’s even possible they’ll see 2011 as the year risk management moved into the forefront of U.S. agricultural policy.
“That this will be a turning-point year is clear today, even without the historians’ benefit of hindsight. True, we don’t know what the next few months’ budgetary maneuvering will produce in the way of a new farm bill. But we know something has to give. There won’t be enough money to continue down the path we’re on.”
DTN Political Correspondent Jerry Hagstrom reported on Friday that, “Crop insurance is ‘going to be the linchpin of the next farm bill,’ [Bill Murphy, the administrator of the Agriculture Department’s Risk Management Agency] said [at a crop insurance conference in Mankato, Minn.], warning that the success of the program and its current size ‘catches the eye on the Hill.’”
The DTN article noted that, “Between drought and flooding, cotton and wheat ‘got off to a pretty bad start,’ Murphy said, but the full picture for this year’s farm losses depends on what happens with the corn and soybean harvests. Of the major U.S. crops covered under crop insurance, corn has the greatest liability at $31.6 million, followed by soybeans at $18 million, wheat at $6.4 million and cotton at $2.9 million, he said.
“Murphy also told the agents that RMA is going through a regular review of crop insurance rates to determine whether modern farming methods have reduced risk and whether the rates can be lowered.”
In other news, Marc Heller reported yesterday at The Watertown Daily Times (NY) Online that, “For all the milk that New York’s 610,000 dairy cows make — a little more than a billion pounds a month — cheese plants and other processing facilities still have to go out of state to meet their needs.
“So why put new limits on how much milk a farm can make?
“That is the reasoning behind Sen. Kirsten E. Gillibrand’s latest dairy policy proposal, which aims to water down production limits proposed by dairy cooperatives and the leading House member on dairy reform, Rep. Collin C. Peterson, D-Minn.
“Mrs. Gillibrand, D-N.Y., will outline her specific ideas for dairy and other farm policies this week. Her office provided the Watertown Daily Times an advance summary of the dairy proposals.”
The article stated that, “The highlight, and perhaps the most politically dicey idea, is to change the ‘market stabilization’ plan offered by Mr. Peterson to allow for milk-deficit states such as New York to boost production without triggering the penalties Mr. Peterson and the cooperatives envision.
“Mrs. Gillibrand maintains a supply management system, which is meant to stop farmers from overproducing when milk prices climb. When the difference between feed prices and milk prices paid to farmers reaches a point that might spur farmers to boost production, they would be paid on less than their full average marketings over the prior three months.
“But she would include a trigger based on supply and demand, freeing farmers to expand if demand is outstripping the local supply.”
Agricultural / Rural Economy
The AP reported late last week that, “Strong farm income is helping the economy in rural areas of 10 Midwest and Plains states continue to grow slowly, according to a new monthly survey of bankers released Thursday.
“The overall Rural Mainstreet index for the region improved to 52.2 in September from last month’s 49.3, suggesting weak economic growth. Anytime that index, which ranges from 0 to 100, is above 50, it suggests the economy will grow.
“Creighton University economist Ernie Goss, who oversees the survey, says this month’s results don’t suggest a recession but the numbers have deteriorated from earlier this year.”
The USDA’s Economic Research Service recently updated its Rural Income, Poverty, and Welfare: Summary of Conditions and Trends Online Briefing Room, which states that: “Unprecedented economic growth during the 1990s benefited rural areas, but some of that benefit has since been lost due to nationwide recession. Between 1993 and 2000, real median income for nonmetropolitan (nonmetro) households grew by 10.5 percent and the percentage of people in poverty fell from 17.1 to 13.4 percent. Between 2000 and 2009, nonmetro median household income decreased from $40,999 to $40,135 (in 2009 dollars), while the nonmetro poverty rate rose from 13.4 percent to 16.6 percent. The 2010 nonmetro poverty rate (16.5 percent) did not change significantly from 2009.
“The past 10 years have also seen the continuation of a 30-year trend toward rising government transfer payments to nonmetro residents, which in 2009 accounted for 24.9 percent of nonmetro personal income, compared to 15.2 percent in metro areas. The increase is mainly a result of the rising cost of medical care nationwide. However, recessionary growth in unemployment insurance compensation and food stamp payments has also been a contributing factor. The nonmetro/metro difference is largely due to a higher proportion of older people and persons with disabilities in nonmetro areas.”
Josiah Ryan reported on Friday at The Hill’s Floor Action Blog that, “The Senate is set to take a preliminary vote on Monday on a bill to renew Trade Adjustment Assistance (TAA) benefits for workers who are disadvantaged by international trade.
“Senate Majority Leader Harry Reid (D-Nev.) explained on Thursday that passing TAA, H.R. 2832, could pave a path forward for the approval of Free Trade Agreements (FTAs) with Colombia, Panama and South Korea, which President Obama has said repeatedly that he wants to see passed.”
Meanwhile, Andrew H. Card, Thomas A. Daschle, Matthew J. Slaughter and Edward Alden penned an Op-Ed in Saturday’s Wall Street Journal titled, “A Pro-Trade Agenda for U.S. Jobs.”
Gannett writer Philip Brasher reported on Saturday that, “Arizona farmer Kevin Rogers has a new routine in the morning: Checking the wind. If it’s too high, he’s required to park his tractors and combines for the day to keep from kicking up dust that’s long been a major cause of air pollution in the Phoenix area.
“Republicans in Congress claim that farmers in the Midwest could face similar restrictions if the Obama administration tightens national limits on how much dust can be in the air.”
After additional analysis, the article also noted that, “Sen. Tim Johnson, D-S.D., said the dust regulation is a ‘false issue’ that Republicans are using to ‘scare people, farmers in particular.’”