August 18, 2019

Budget and Farm Bill; Regulations; MF Global; and Trade

Categories: Audio /Budget /Farm Bill /Trade

Budget and Farm Bill Issues

Janet Hook and Naftali Bendavid reported in today’s Wall Street Journal that, “Congressional leaders—fearful of voters’ wrath over Washington’s bickering and brinkmanship—stepped back Thursday from a possible government shutdown, clearing the way for at least a short-term extension of a payroll tax cut that is set to expire at year’s end.

“The shift marked a dizzying change in tone from the contentious atmosphere that prevailed just a day earlier. Republican and Democratic leaders returned to the bargaining table and struck a deal on a $1 trillion spending bill to keep the government operating after Friday.

A deal was harder to come by on Congress’ second quest, which is to agree on a yearlong extension of the payroll tax cut and of expiring unemployment benefits. But the chances of keeping the tax cut in place at least temporarily improved as Democratic officials said they were preparing a fall back to a two-month extension if they fail to reach a longer-term agreement in the coming days.”

The Journal writers noted that, “The spending bill compromise was finalized late Thursday, after Democrats won last-minute concessions, including an agreement to drop a GOP proposal to overturn an Obama policy by imposing stricter limits on travel to Cuba. Efforts to strike a compromise on the payroll tax will continue Friday, as negotiators struggle for a deal on how to offset the cost of a full, yearlong extension of the tax reduction, which could exceed $200 billion over 10 years.

“Senate Majority Leader Harry Reid (D., Nev.) confirmed that negotiators were considering a two-month fallback plan that, according to a senior Democratic aide, would cost about $40 billion. That path would force Congress and the White House to re-fight the issue early next year during the GOP presidential primary season.”

Today’s article also pointed out that, “The payroll tax bill also is expected to extend unemployment benefits and block a scheduled cut in Medicare payments to doctors. In the search for offsetting moves to finance the payroll tax reduction, a senior Democratic aide said that negotiators had identified more than $100 billion in spending cuts and fee increases that could draw bipartisan support—including a proposed increase in guarantee fees that mortgage lenders pay to Fannie Mae and Freddie Mac.”

Paul Kane reported in today’s Washington Post that, “Among the ideas being considered to pay for the cut, aides said, were raising fees Fannie Mae and Freddie Mac collect from lenders and ending a tax break on the sale of corporate jets.”

Jennifer Steinhauer and Robert Pear reported in today’s New York Times that, “While Democrats have dropped their idea of imposing a surtax on income over $1 million, they are now considering a plan that would find savings in other ways, including fees on the federal housing finance agencies, and could seek to end certain deductions and other tax benefits for millionaires.”

Meredith Shiner reported last night at Roll Call Online that, “A Democratic source close to the talks indicated that negotiators had found $105 billion to $110 billion in the larger discussion for offsets, which is about halfway to the total needed for a full one-year extension. Republicans would not confirm this figure, and divisions over how to pay for such a bill are wide.

“Democrats had dropped their demand for a millionaires surtax, but Republicans are still pushing for a pay freeze for federal workers.”

Meanwhile, Dina ElBoghdady reported in today’s Washington Post that, “A long-delayed Obama administration proposal that would restrict the types of foods and drinks that are marketed to children suffered another setback Thursday when Capitol Hill demanded a cost-benefit analysis.

“An inter-agency working group was supposed to finalize the proposal more than a year and a half ago. But strong push back from the food and beverage industry forced deeper deliberation of the initiative and several delays.

Senate and House members asked for the assessment Thursday as part of the massive spending bill that will keep the federal government running past Friday.”

The Post article explained that, “The administration’s proposal aims to tackle childhood obesity by having the industry market to children only those foods and drinks that make a ‘meaningful contribution’ to a healthful diet and limit sodium, fats and added sugars. Foods that do not meet the guidelines could not be advertised to children.

“The administration has stressed repeatedly that the plan is voluntary and meant to serve only as a guideline. But the industry says the initiative amounts to a backdoor regulation that will in effect wipe out advertising to children, eliminate millions of jobs and infringe on commercial free speech.

“The spending bill rider bars the Federal Trade Commission, the lead agency on the food marketing initiative, from spending money on finalizing the proposal until the agency and its partners comply with an executive order signed in January by President Obama.”

In more specific Farm Bill developments, a recent Congressional Research Service (CRS) report (“Farm Safety Net Proposals and the Joint Select Committee on Deficit Reduction,” by Dennis A. Shields and Randy Schnepf (Nov. 28)) stated that, “Budget deliberations by the Joint Select Committee on Deficit Reduction in fall 2011 generated concerns that a farm bill to reauthorize farm programs expiring in 2012 might be written by budget negotiators rather than by the House and Senate Agriculture Committees. Various proposals emerged that recommend lower federal spending, including cuts to agriculture programs ranging from $10 billion to more than $80 billion over 10 years.

“In response, Members of Congress, the Administration, and a number of farm groups put forward proposals to reduce government expenditures on farm subsidies and revise farm programs. Many of these farm program proposals were unveiled in September 2011 as the Joint Select Committee on Deficit Reduction began its deliberations on government-wide budget cuts.

“Ultimately the joint committee failed to reach a bipartisan consensus on deficit reduction. As a result, it is likely that the 2012 farm bill will now follow a more traditional legislative process starting sometime in 2012. However, the joint committee process generated substantial movement toward reshaping the policy framework underlying the farm safety net and other major farm bill issue areas, such as conservation and nutrition.”

The CRS update pointed out that, “Many proposed cuts and policy changes have been directed at commodity programs and crop insurance because these programs account for the bulk of agricultural funding (excluding conservation and nutrition programs, which are also considered part of the agricultural budget).”

On the issue of crop insurance, an update yesterday from the National Crop Insurance Services pointed out that, “Crop insurance companies have paid out more than $7.1 billion and climbing in claims so far this year, which makes 2011 second only to 2008’s $8.6 billion in the total value of indemnities paid out to farmers. The combination of several large-scale floods in the Central U.S., record droughts in the southern plains, a strong tropical storm in the Northeast and a hard freeze in Florida set the stage for the widespread agricultural losses [See related graph].

“But what is the significance of this? The fact is that despite being one of the worst weather years in recent history, farmers had a policy backstop in place—crop insurance—to preclude major losses from natural disasters or market fluctuations that could lead to widespread bankruptcies and foreclosures.

“Thankfully, Congress had the foresight to make decades of significant investments in crop insurance infrastructure, increase the varieties of crops covered and policies available as well as augmenting resources to increase farmer participation. The net result is the resilient and robust modern-day crop insurance policy.”

The topic of crop insurance also came up yesterday during a Senate Agriculture Committee nomination hearing.  The Committee considered the nomination of Michael T. Scuse, of Delaware, to be Under Secretary of Agriculture for Farm and Foreign Agricultural Services and a Member of the Board of Directors of the Commodity Credit Corporation.

During a portion of her remarks yesterday, Committee Chairwoman Debbie Stabenow (D-Mich.) asked Mr. Scuse about crop insurance delivery, and expanding access to risk management tools to all farmers and ranchers- related audio clip available here (MP3- 2:37).

Likewise, Committee Ranking Member Pat Roberts (R-Kansas) highlighted crop insurance issues during a portion of his exchange with Mr. Scuse- related audio available here (MP3- 3:15)

Also yesterday, on the Agriculture Today radio program (Red River Farm Network), Don Wick filed a report from Washington, D.C. which included perspective on the Farm Bill from Secretary of Agriculture Tom Vilsack, as well as Mary Kay Thatcher, the Senior Director of Congressional Relations at the American Farm Bureau Federation.  To listen to a portion of yesterday’s Agriculture Today program, just click here (MP3-3:43).

The U.S. Department of Agriculture’s Economic Research Service yesterday released the “Farm Program Atlas,” a very helpful tool that “provides access to an array of public data on Federal farm programs that will allow users to visually explore a core component of U.S. agricultural policy.”

And the AP reported yesterday that, “The U.S. Department of Agriculture has unveiled a free online tool aimed at helping farmers lower their risk of contamination on the farm by generating customized food safety plans.

“How farmers grow, pack, and trace produce has become a major concern following numerous deadly foodborne safety illness outbreaks in recent years.

“The new tool was developed with consultation from small and large farmers.”



Philip Brasher reported yesterday at The Green Fields Blog (Des Moines Register) that, “The South Dakota lawmaker who’s leading the effort to block regulation of rural dust is trading barbs with Agriculture Secretary Tom Vilsack.

“Vilsack earlier this week accused House members of perpetuating a myth that legislation is needed to stop the Environmental Protection Agency from tightening national standards for pollution from what is known as coarse particulate matter. ‘Simply not true! The EPA is not now, nor has it ever proposed regulating dust,’ Vilsack wrote in a blog post.

“Rep. Kristi Noem, R-S.D., shot back today that Vilsack ‘doesn’t like Congress using its authority to tell EPA what its boundaries are, but that’s our job.’ Then she had some advice for the former Iowa governor: ‘At the end of day his job should be to represent producers in this country, not the president.’”

And Tom Steever reported yesterday at Brownfield that, “Representative Kristi Noem is worried that new labor regulations may prevent young people from working on farms. The South Dakota Republican told reporters Thursday she’s sending a letter to the labor secretary expressing concerns she says are shared by South Dakota farmers.”

On the other hand, Julie Harker reported yesterday at Brownfield that, “While the ag community is speaking out against new proposed federal regulations on child labor – US Ag Secretary Tom Vilsack weighs in. On the USDA blog, the Secretary says that ‘it’s important to know’ that the Department of Labor ‘is not proposing any changes to how a son or daughter can help on their family farm.’ Further, Vilsack wrote on December 12th, ‘there is nothing in the proposed rule that affects the ability of parents and families to assign chores and tasks to their children.’”


MF Global

Aaron Lucchetti and Scott Patterson reported in today’s Wall Street Journal that, “Former MF Global Holdings Ltd. Chief Executive Jon S. Corzine testified Thursday (video archive) that he knew about an overseas transfer of funds that has come into focus in recent days as regulators and Congress seek to find out what became of an estimated $1.2 billion in missing customer cash.

“Mr. Corzine testified, however, that he received assurances that the transfer of millions of dollars to a J.P. Morgan Chase & Co. account in London on Oct. 28, the last business day before MF Global filed for bankruptcy, was approved by at least one official in MF’s back office.

“‘The back office in Chicago explicitly confirmed to me that the funds were properly transferred, and I understood that J.P. Morgan Chase was satisfied,’ Mr. Corzine said, adding that he believed some of the confirmations were in writing.”

Today’s article added that, “The firm’s primary regulator at the exchange level, CME Group Inc., has suggested Mr. Corzine knew about certain transfers of funds that may have been improper.

“Mr. Corzine has said that he ‘never directed anyone at MF Global to misuse customer funds.’”

Shannon Bond reported last night at The Financial Times Online that, “Jon Corzine, the former chief executive of MF Global, has denied that he knew the broker-dealer lent customer funds to a European affiliate shortly before it went bankrupt.

“At a House financial services subcommittee hearing on Thursday, Terry Duffy, chief executive of CME Group, the exchange operator that oversaw MF Global’s customer accounts, repeated his claim that ‘Mr Corzine was aware of the loans being made from segregated accounts’.

“He attributed that to a CME auditor who heard the comment during a conference call involving senior MF Global employees. Mr Duffy first made the allegation that Mr Corzine knew about transfers of customer funds in an appearance before a Senate panel on Tuesday.”

The FT article noted that, “Addressing the House hearing on Thursday, Mr Corzine said he did not know the source of Mr Duffy’s allegation.

“‘Let me be clear. While the last few days of MF Global were chaotic, I did not instruct anyone to lend customer funds to MF Global or any of its affiliates, nor was I told that anyone had done so,’ he said.

“Pressed by Randy Neugebauer, the subcommittee’s chairman, he said: ‘I don’t know how to respond to something that someone said to somebody else to somebody else that is unidentified.’”   (To listen to an exchange yesterday between Rep. Neugebauer and Mr. Corzine, just click here (MP3- 6:34)).

Jacob Bunge reported yesterday at The Wall Street Journal Online that, “The vice chairman of CME Group Inc. is suing former MF Global Holdings Ltd. Chief Executive Jon Corzine, adding to the tension between the world’s largest futures exchange and what was formerly one of its largest customers.

“Mr. Corzine is among the former MF Global executives named in a suit filed by CME Vice Chairman Charles Carey and fellow CME director Joseph Niciforo, along with several other Chicago-area traders, alleging that the failed company improperly handled accounts of those traders and Mr. Carey’s and Mr. Niciforo’s trading firm, which is independent of CME.”

And, an item that aired earlier this week on the All Things Considered radio program (NPR) (“Rancher Discusses Losing Money With MF Global”) indicated that, “The bankruptcy of MF Global — and the mismanagement of its clients’ money — is causing trouble for a lot of ranchers and farmers. They were major clients of MF Global, buying futures contracts to hedge against swings in the value of their crops and livestock. MF Global cannot account for more than a billion dollars of its customers’ cash. Lynn Neary speaks with cattle rancher Tim Rietzke of Coldwater, Kan., about his lost money.”



A news release yesterday from Senator Mike Enzi (R-Wyo.) indicated that, “U.S. Senators Tim Johnson (D-S.D.) and Mike Enzi today called on Agriculture Secretary Tom Vilsack and U.S. Trade Representative Ron Kirk to appeal a World Trade Organization (WTO) decision hurting consumers’ right to know where there food is coming from and our nation’s producers’ ability to sell their high-quality products.  A bipartisan group of 19 Senators led by Johnson and Enzi are urging action by the Administration.

“‘I applaud the panel for acknowledging that we have the right to require labeling, but I am concerned about the impact that the decision by the WTO panel will have on USDA’s ability to continue implementing country of origin labeling. I want the Administration to appeal the decision because people want to know that beef or pork they are eating was raised in the USA,’ Johnson said.”

Keith Good

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