Budget and Farm Bill Issues
“The Connecticut lawmaker’s office sent an email Wednesday to more than three dozen Senate chiefs of staff pushing the proposal.”
The article added that, “Lieberman is drafting a bill that would ‘establish a process’ for a vote on the recommendations under an expedited process by March 30, 2012, according to the email.”
Meanwhile, Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “House Majority Leader Eric Cantor (R-Va.) is talking to Democrats and Republicans about replacing automatic spending cuts triggered by the supercommittee’s failure with cuts to mandatory spending.
“Aides said Cantor has discussed replacing cuts to the Pentagon and domestic spending set to be implemented in 2013 with cuts agreed to by both parties in deficit talks last summer led by Vice President Biden. The ideas are similar to cuts proposed by President Obama to the supercommittee.
“Cantor would use the savings to pay for a one-year extension of the payroll-tax cut and an extension of federal unemployment insurance benefits, both of which are set to expire by the end of the year.”
And Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “While some Republicans are taking heat for seeking to mitigate $600 billion in sequestration cuts to the Defense Department, a handful of House Democrats this week put forward their own proposal to spare Medicare from spending cuts triggered by the August debt deal.”
Also yesterday, Russell Berman reported at The Hill Online that, “House Speaker John Boehner (R-Ohio) on Thursday called on President Obama to intercede in the growing push to change the automatic spending cuts to military and domestic programs triggered by the congressional supercommittee’s failure to strike a deficit-reduction deal.
“The $1.2 trillion in across-the-board cuts will take effect in 2013, and Republican leaders, along with some Democrats, have said they want to change them to protect the military. Obama has threatened to veto any effort to undo the trigger, known as sequestration, although the White House is still pushing for a broad deficit pact.”
Nonetheless, John Stanton and Daniel Newhauser reported yesterday at Roll Call Online that, “The House won’t be taking up changes to mandatory cuts to defense spending anytime soon despite increasing calls from GOP defense hawks and some leaders to tackle the issue this year.”
The Roll Call article explained that, “But Speaker John Boehner (R-Ohio), who had given his blessing to Cantor’s efforts, now appears intent on pushing the issue until sometime next year.
“When asked whether the sequester could be repealed before the end of the calendar year, Appropriations Chairman Hal Rogers (R-Ky.) said, ‘I don’t see how you could.’”
The article added that, “A GOP aide familiar with the situation agreed, saying, ‘I believe that issue is settled’ and that Republicans will now look to move the unemployment insurance and payroll tax cut extension as a stand-alone package.
“Cantor is expected to continue his efforts to craft a bipartisan deal to change the sequester, although it also will now be a stand-alone measure.”
And Naftali Bendavid and Janet Hook reported in today’s Wall Street Journal that, “The Senate late Thursday blocked competing Democratic and Republican proposals for extending the current payroll-tax break, but that could clear the way for the two parties to negotiate a broader deal on that and other crucial items by year end.
“The Democratic bill extending the tax cut for an additional year, to have been funded by a surtax on those earning more than $1 million a year, won a 51-49 majority, short of the 60 needed for passage.
“More surprising was the fate of the Republican version, to have been paid for by shrinking the federal workforce. It was blocked 20-78, with all Democrats and 26 Republicans voting no.”
The Journal article stated that, “Both sides insisted an agreement to extend the tax holiday is still likely before it expires at year end.”
In Farm Bill news, an update posted yesterday at Farm Futures Online reported that, “A farm policy architect in the Bush Administration finds a silver lining in the failure of the Congressional Super Committee to agree on a modest deficit reduction package. Former USDA Deputy Secretary Chuck Conner says the chairmen of the House and Senate Agriculture Committees engaged in a worthwhile effort to pass a new farm bill via the Super Committee process.
“‘There’s been a lot of dialogue, a lot of important dialogue in the last few weeks on the future of farm policy,’ Conner said. ‘And I think that dialogue will be valuable to us as presumably the leadership of the House and the Senate Agriculture Committee will be ready very early next year to pick up where we left off here and begin a farm bill process under more regular order and I think that can be a healthy, good process.’”
The update added that, “That’s not to say that Conner, now the President and CEO of the National Council of Farmer Cooperatives, believes writing the farm bill under regular order, complete with public hearings and markups, will be easy.”
Brian Francisco reported yesterday at the Journal Gazette Online (Fort Wayne, IN) that, “Before disbanding, the congressional debt-reduction committee considered agriculture spending cuts advocated by Sen. Richard Lugar, R-Ind., and Rep. Marlin Stutzman, R-3rd.
“‘It was not exactly as we presented it, but there were a lot of facets in the REFRESH Act that were on the table at the very end, until everything fell apart,’ Stutzman said Wednesday in an interview.”
The article pointed out that, “Asked about the mood on Capitol Hill in the wake of the supercommittee’s failure to recommend budget cuts, Stutzman said: ‘There’s a lot of disappointment, there’s a lot of frustration, there’s a lot of anxiety. … It’s, ‘Now what? What’s the next step?’”
Also yesterday, Daniel Looker reported at Agriculture Online that, “An add-on policy designed to cover shallow losses was part of the farm bill proposal that was being rushed to the failed deficit-cutting Super Committee, Representative Randy Neugebauer (R-TX) told Agriculture.com today. And the Texan who serves on the House Agriculture Committee is hoping that it will be part of the final farm bill that Congress will work on in 2012.
“‘We’ve been working on this for a number of years now,’ Neugebauer said. ‘We’ve been working on a program that was more flexible, that had more options and was cost effective.’
“Neugebauer introduced his idea, called the Crop Risk Options Plan (CROP) as a separate bill in the House in October. It would allow producers to insure against shallow losses, which can be 25% to 30% of a farmer’s expected production. Under typical levels of coverage today, existing insurance doesn’t cover those losses.”
Mr. Looker indicated that, “Neugebauer’s program would be similar to today’s Group Risk programs, but farmers could add it to their existing coverage. Payments would be triggered if losses occur at the county level.
“The program would have several improvements over current crop insurance. USDA’s Risk Management Agency (RMA) would determine a farm’s yield history using a seven-year Olympic Average (which throws out the high and low years). That’s a more accurate reflection of productivity on today’s farms, Neugebauer says. And the county-level yields would be derived from RMA data, not the National Agricultural Statistics Service.
“Neugebauer said that his changes reflect conversations with producers about how crop insurance can be improved. And it’s a logical way to improve farm programs.”
Yesterday’s article noted that, “Exactly how much USDA would be able to subsidize something like Neugebauer’s CROP program will depend on how much funding is available for the next farm bill.
“‘It’s always about the money,’ Neugebauer says.”
Senate Ag Committee Hearing: MF Global
DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Senators looked for answers Thursday regarding whether the MF Global collapse was a one-time market failure, part of a bigger systemic problem, a loophole in regulations, or a breakdown of basic oversight.
“Initially, the Senate Agriculture Committee hearing was supposed to highlight how the Commodity Futures Trading Commission and Securities and Exchange Commission were implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act. But from the opening salvos, the focus was on how regulators allowed the MF Global bankruptcy to entangle customer accounts to the tune of an estimated $1.2 billion.
“Almost every senator had tales of farmers and grain elevators caught in the bankruptcy with frozen assets and lack of answers about what happened to their accounts.”
The DTN article noted that, “As has been documented over the past month, the MF Global bankruptcy has hurt the confidence of farmers, grain elevators and others who invest in commodity futures.”
Mr. Clayton added that, “In describing the impacts on people, [Sen. Max Baucus, D-Mont.] said he knew one Montana farmer who had $336,000 in assets at MF Global and another $108,000 in open trades with the company. He has recouped 60% but thus far appears to be out 40% of his funds. Baucus said such situations exacerbate the lack of faith in Washington to protect people in financial markets.
“‘How can ordinary folks trust Washington with their money? How can they?’ Baucus said.
“CFTC Chairman Gary Gensler, who has recused himself from the MF Global investigation, agreed with Baucus’ assertion.
“‘You are absolutely right. The system needs to work for the farmers and ranchers and energy companies and all of the people who rely on segregation of funds as the absolute core of this system,’ Gensler said.”
Reuters writers Christopher Doering and Sarah N. Lynch reported yesterday that, “Gensler recused himself from the CFTC’s probe into MF Global after it filed for bankruptcy on Oct. 31. Gensler and Jon Corzine, who resigned as chief executive of MF Global last month, worked together at Goldman Sachs Group Inc in the 1990s.
“‘It looks to me like you’re trying to avoid the heat,’ Senator Mike Johanns, a Republican, said of Gensler’s decision to remove himself from the MF Global investigation. ‘You certainly didn’t recuse yourself all of the other weeks and months and days while MF Global was doing what it was doing.’
“Gensler defended himself before the Senate Agriculture Committee, saying that, while he did not recuse himself immediately, he did so as soon as the CFTC prepared for possible civil and criminal charges.”
The article noted that, “Before the collapse, MF Global had nearly a half dozen regulators policing various parts of the firm, including the CFTC, the Securities and Exchange Commission and industry watchdogs such as the Chicago Mercantile Exchange . But no single regulator was responsible for the whole company.
“‘We need to get to the bottom of exactly what happened with MF Global,’ said Senator Pat Roberts the top Republican on the Senate Agriculture Committee. ‘Unfortunately, the manner in which Mr. Gensler chose to step aside and recuse himself has raised more questions than it has answers.’”
The AP reported yesterday that, “The top Democrat and Republican on a key Senate panel say Congress should look deeply into what led to the collapse of MF Global, a trading firm run by one of their former colleagues.
“Sen. Debbie Stabenow, the chairman of the Senate Agriculture Committee, said at a hearing Thursday that the firm’s failure has shaken investors’ confidence. Sen. Pat Roberts of Kansas, the panel’s ranking Republican, called it a serious problem.”
The article indicated that, “Roberts and other senators on the panel said they’ve heard concerns raised by farmers, ranchers and small businessmen who use the futures markets to hedge against risks. Many said they’ve lost money that they had deposited with MF Global.
“Sen. Max Baucus, D-Mont., said those he’s spoken with say they have recovered about 60 percent of their funds. They doubt they’ll get much more back, he said.
“Roberts said people ‘have been severely damaged. They want to know what happened and see it doesn’t happen again.’”
Dow Jones News reported yesterday that, “Ranking member Sen. Pat Roberts (R., Kan.) said that regulators have to find out what happened at MF Global ‘in a manner that restores faith in the futures market.’
“The Commodity Futures Trading Commission is leading the regulatory probe into the estimated $1.2 billion in funds missing from customers’ futures accounts. Chairman Gary Gensler, who has recused himself from the investigation because of his ties to former MF Global Chief Executive Jon Corzine, said that the CFTC is broadly re-examining the agency’s oversight of the futures industry, including its reliance on self-regulatory organizations.
“‘We know that this has to be better,’ Gensler said.”
Christine Tierney reported today at The Detroit News Online that, “Sen. Debbie Stabenow, head of the Senate Agriculture Committee looking into the collapse of commodities brokerage firm MF Global Inc., said lawmakers may need to tighten rules limiting where customers’ money can be invested.
“Some exemptions, such as allowing the investment of customer money in foreign government debt, should be reviewed, Stabenow, D-Lansing, told reporters after a committee hearing with financial regulators.”
The article added that, “‘How is it possible that someone is able to bet the farm here, multiple times over, and it disappears from the balance sheet because of this repo-to-maturity technique?’ asked Sen. Kent Conrad, D-N.D.”
And Jamila Trindle reported yesterday at The Wall Street Journal Online that, “The House Agriculture Committee is considering subpoenaing Jon Corzine, the former chief executive of failed broker-dealer MF Global Holdings Ltd., to compel him to testify at a Dec. 8 hearing before the panel, people familiar with the meeting said.
“The committee said late Thursday that it would meet Friday morning to ‘consider the issuance of a subpoena to compel the attendance of a witness at the subsequent hearing to examine the MF Global bankruptcy.’”
House Ag Committee Hearing: SNAP
A news release yesterday from the House Agriculture Committee stated that, “Today, Rep. Jeff Fortenberry, Chairman of the House Agriculture Committee’s Subcommittee on Department Operations, Oversight, and Credit held a public hearing to review updates to the audits of the U.S. Department of Agriculture’s (USDA) Inspector General. These audits include Supplemental Nutrition Assistance Program (SNAP) fraud detection and USDA’s use of additional funding for information technology to improve program delivery. The hearing is a continuation of oversight efforts to ensure proper use of taxpayer funds.”
During the hearing, Rep. James McGovern (D-Mass.) commented on the relatively low rate of improper SNAP benefit payments (related audio– MP3- 0:37); while, Rep. Fortenberry commented on additional needs regarding measurement metrics that would help establish the accuracy of SNAP payments in the future (related audio– MP3-2:14).