FarmPolicy

September 1, 2014

Budget-Payroll Tax- State of the Union; Farm Bill; MF Global; and Biofuels

Categories: Budget /Ethanol /Farm Bill

Budget- Payroll Tax- State of the Union

A House Budget Committee news release from yesterday stated that, “The House Budget Committee advanced three legislative reforms today to address the broken budget process. The reforms focused on bringing greater accountability and transparency, and stronger protections for hardworking Americans’ tax dollars. While the House Budget Committee works to advance solutions, today marks 1,000 days without any budget from the U.S. Senate.”

And Alexander Bolton reported yesterday at The Hill Online that, “Senate Republican Leader Mitch McConnell (Ky.) pledged Tuesday that Republicans would pass a budget every year if they win control of the Senate in November.”

However, Josiah Ryan reported yesterday at The Hill’s Floor Action Blog that, “Pointing to the Budget Control Act the Congress passed last summer, Chairman of the Senate Budget Committee Kent Conrad (D-N.D.) attempted to debunk the GOP’s repeated claims on Tuesday that the Senate had not passed a budget in a 1,000 days.

“‘When our colleagues come out here and say we have not passed a budget in 1,000 days … wow,’ Conrad exclaimed from the Senate floor. ‘Could they have really missed … the consideration of the Budget Control Act? Did they really miss all of that or are they saying something they know not to be true?’”

Yesterday’s update added that, “Conrad said the Budget Control Act, which the Congress passed last summer after weeks of horse-trading over raising the debt ceiling, included the budget for this year and next year and that in many ways it is ‘stronger’ and ‘more extensive’ than a traditional budget.”

Meanwhile, Julian E. Barnes and Adam Entous reported in today’s Wall Street Journal that, “The Pentagon on Thursday will announce a proposal to spend $525 billion in fiscal 2013, the second year of reductions as the administration moves to roll back the military budget, U.S. officials said…The proposal is $6 billion lower than the 2012 base budget of $531 billion, approved by Congress, which was a cut of $22 billion from the administration’s proposal for the current year.”

The Journal article added that, “The Pentagon is under a threat of even deeper cuts as a result of last summer’s deficit-reduction deal.”

On the issue of the payroll tax cut extension, Daniel Newhauser and Humberto Sanchez reported today at Roll Call Online that, “Top Senate Democrats on Tuesday called for a package of tax extenders to be included in payroll tax cut conference committee discussions, adding yet another hurdle to the already arduous path to a bipartisan deal.

“Conferees met for the first time Tuesday afternoon and showcased the wide gulf between the parties on the must-pass legislation and other provisions the parties want to include. The bicameral panel has about a month to craft a deal, or payroll taxes will go up for millions of Americans.

Already far apart on extending and paying for a payroll tax holiday, unemployment insurance benefits and a fix to doctors’ Medicare payments, Republicans dug in on the construction of a controversial oil pipeline and on the reversal of environmental regulations. Democrats resurrected their desire to impose a surtax on millionaires.”

The article added that, “Rep. Dave Camp (Mich.), the conference committee’s Republican co-chairman, said he is chiefly concerned with how to offset the cost of the payroll tax cut.”

Carol E. Lee and Laura Meckler reported in today’s Wall Street Journal that, “President Barack Obama offered Americans a populist economic vision in his State of the Union address Tuesday, seeking to draw a contrast with his eventual Republican rival and demonstrating the widening policy gulf between the two political parties.

“Mr. Obama’s laundry-list of initiatives—steep tax increases on wealthier Americans, fresh investigations into the mortgage crisis and support for domestic manufacturing—was aimed at buttressing a re-election message that posits him as defender of Americans beset by inequality in the tax code and broader economy.”

Helen Cooper reported in today’s New York Times that, “Mr. Obama also proposed a new trade enforcement unit that would add to the number of government investigators pursuing unfair trade practices and that would be responsible for filing lawsuits against foreign countries, namely China.”

The American Soybean Association (ASA) issued a statement from ASA President Steve Wellman regarding last night’s address by the President that contained a nice summary of key issues.  In part, Mr. Wellman noted that, “ASA applauds the president’s emphasis on international trade, including the passage of free trade agreements with Panama, Colombia and South Korea. We encourage the administration and Congress to redouble its efforts to ensure the long-term success and sustainability of export markets for American agricultural products.”  (FarmPolicy Note: In other trade news, Reuters writer Doug Palmer reported yesterday that, “A coalition of over 80 U.S. business groups on Tuesday raised concerns about President Barack Obama’s plan to create a new department of trade by consolidating the relatively small office of the U.S. Trade Representative with five other agencies.”)

The ASA statement added that, “Farmers are concerned about increasing regulatory requirements that impede their freedom to operate in producing safe and nutritious food. ASA applauds the president’s statements about farmers not needing a government agency to look over their shoulder, and we urge the administration to require that agencies review existing regulations with the view to reduce the regulatory burdens on farmers.”

In last night’s address, Pres. Obama noted that, “We got rid of one rule from 40 years ago that could have forced some dairy farmers to spend $10,000 a year proving that they could contain a spill — because milk was somehow classified as an oil. With a rule like that, I guess it was worth crying over spilled milk. Now, I’m confident a farmer can contain a milk spill without a federal agency looking over his shoulder.”

A news release yesterday from the House Agriculture Committee stated that, “This week during The Ag Minute [MP3], Chairman Frank Lucas discusses the need for President Obama to make good on last year’s promise to rein in regulations that put an unnecessary burden on businesses.”  (FarmPolicy Note: In other developments regarding regulations, a news release yesterday from Kansas GOP Sen. Jerry Moran stated that, “[Sen. Moran] has invited U.S. Secretary of Labor Hilda Solis to Kansas so she can personally see how proposed rules by the Department of Labor threaten the future of family farms. If implemented, the rules will impose overly-burdensome restrictions on many common farm activities of youth on farms or ranches not directly owned by their parents. These changes will fundamentally alter the rural way of life and disrupt agriculture practices across the country.”)

And National Farmers Union President Roger Johnson stated yesterday that, “We are pleased that the president and the administration have renewed their pledge to the United States’ energy independence. As the president said, we need to seek ‘a future where we’re in control of our own energy, and our security and prosperity aren’t so tied to unstable parts of the world. An economy built to last, where hard work pays off, and responsibility is rewarded.’ Homegrown energy is how we keep money, jobs and families in rural America.”

 

Farm Bill

Kevin Diaz reported yesterday at the Minneapolis Star-Tribune Online that, “Minnesota’s Collin Peterson, the ranking Democrat on the House Agriculture Committee, is only ‘relatively optimistic’ about renewing major farm legislation this year, while Tim Walz, another rural Minnesota Democrat, sees little prospect of ‘doing a farm bill of any type.’”

With respect to budget implications, Mr. Diaz pointed out that, “But with the Obama campaign targeting congressional Republicans, and Republicans targeting Obama, the possibility exists of a no-deal Congress that kicks a major deficit reduction package into 2013, possibly even forfeiting the Bush tax cuts.

“‘We’re good at doing nothing,’ Peterson said, ‘and that’s all you’ve got to do to make it happen.’”

A Reuters news article from yesterday (posted at DTN, link requires subscription) reported that, “Senators will take a careful look before writing a new U.S. farm law as doubts rise if they can finish work before an election-year gridlock in Congress strands the bill, said the chairwoman in charge of the legislation.

“‘It’s not about rushing,’ said Agriculture Committee chairwoman Debbie Stabenow on Tuesday in impromptu comments.

Farm policy experts say the odds are 50/50 for enacting a farm law this year.”

The Reuters article pointed out that, “‘If something’s going to be done before the election, it has to be done fairly soon,’ said Iowa Sen Charles Grassley, an Agriculture Committee member, earlier on Tuesday.”

In other developments, a news release yesterday from National Crop Insurance Services (NCIS) stated that, “For the first time in history, indemnity payments surpassed the $9 billion mark, [NCIS] said today, noting that payments made to farmers for damages to the 2011 crop would continue to climb.

“From historic droughts in the Plains to flooding along the Mississippi River and deep freezes in the South, growers faced unparalleled challenges in 2011 and crop insurance reached record amounts. The record of $9.1 billion could surpass $10 billion as the remaining claims are settled, NCIS noted. The previous record of $8.67 billion was set in 2008.

“‘Thanks to the foresight of Congress, crop insurance has been in place to weather enormous natural disasters and help ensure that farmers survive to plant yet another year,’ said Tom Zacharias, president of NCIS. ‘Those billions in damages would have landed on the plates of input suppliers, lenders, marketers and farm families if crop insurance wasn’t in place,’ he said.”

Julie Buntjer reported earlier this week at The Worthington Daily Globe Online (Minn.) that, “According to the Minnesota Department of Natural Resources, an estimated 550,000 acres of Minnesota land will expire from the Conservation Reserve Program (CRP) in the next three years.

“The federal program, which offers landowners an option to idle marginal lands in a 10-year or 15-year contract, can’t afford to keep all of those acres enrolled. Farmers, lured by higher grain prices, can in some cases earn more money by putting the land back into crop production.”

For additional information on conservation issues, see this Congressional Research Service report from last week titled, “Agricultural Conservation and the Next Farm Bill.”

With respect to nutrition issues, Nicholas Bakalar reported yesterday at The New York Times Online that, “In the fight against childhood obesity, communities all over the country are banning the sale of sweets and salty snacks in public schools. But a new study suggests that the strategy may be ineffective.”

The Times article added that, “No matter how the researchers looked at the data, they could find no correlation at all between obesity and attending a school where sweets and salty snacks were available.”

And the AP reported today that, “First lady Michelle Obama and Agriculture Secretary Tom Vilsack are expected to announce Wednesday that most school meals, including pizza, will have less sodium, more whole grains and more fruits and vegetables as sides. The popular pizzas will still be on school lunch lines but made with healthier ingredients.

“Mrs. Obama and Vilsack were making the announcement at an elementary school in Alexandria, Va., with celebrity chef Rachael Ray.”

In other news, the Congressional Research Service released a report Friday titled, “The Role of Local Food Systems in U.S. Farm Policy,” [Editor's Note: The link to this CRS report has been updated reflecting changes from the original- 1.26- kg] which stated that, “Although the 2008 farm bill included a few new provisions that directly support local and regional food systems, and also contains several programs that benefit all U.S. agricultural producers, it currently does not contain many programs that directly support local and regional food systems. Many community and farm advocacy groups have argued that such food systems should play a larger policy role within the farm bill, and that the laws should be revised to reflect broader, more equitable policies across a range of production systems, including local and regional food systems” (at page 29).

The CRS report also stated that, “Those opposed to extending farm bill benefits to local food systems cite concerns about overall limited financial resources to support U.S. agricultural producers as well as concerns that the most efficient and productive use of natural resources be employed for producing food. As shown by challenges from some in Congress to USDA’s ‘Know Your Farmer, Know Your Food’ initiative, there are concerns about the perceived priorities of USDA and fear that a shift in priorities may result in fewer resources for ‘conventional farmers who produce the vast majority of our nation’s food supply’” (at page 30).

 

MF Global

A news release yesterday from Sen. Kent Conrad (D., N.D.) stated that, “[Sen. Conrad] today reminded former MF Global customers that the deadline to submit claims against the now-bankrupt brokerage firm is January 31, 2012.  MF Global is accused of defrauding investors – including a number of North Dakotans – after making bad bets on European debt.”

And a news update yesterday from The Futures Industry Association yesterday stated that, “The Futures Industry Association announced today that it has established a special committee to address issues related to the bankruptcy of MF Global. The Futures Market Financial Integrity Task Force will develop and recommend specific measures that can be implemented in the near term through both industry best practice and regulatory change. In addition to these measures, the FIA intends to work with end-users and other market participants to examine the adequacy of current customer funds protection models in response to concerns raised by the MF Global bankruptcy.”

 

Biofuels

A news release Monday from the Renewable Fuels Association stated that, “Today, Judge Lawrence J. O’Neill denied the California Air Resources Board’s (CARB) motion to stay the decision he issued on December 29, 2011 that had halted the enforcement of the California’s Low Carbon Fuel Standard (LCFS) regulation because that regulation is unconstitutional.”

And Josie Garthwaite reported Monday at the Green Blog (New York Times) that, “Seaweed often brings to mind thoughts of surf and sushi, not fuel. But that could change if a biotechnology start-up called Bio Architecture Lab succeeds in building a new kind of energy company from designer bacteria and a low-cost process for harvesting seaweed.

“The key is a genetically modified strain of Escherichia coli bacterium, which can break down the sugars in brown seaweed, or macro-algae, to produce ethanol, according to new research published in the peer-reviewed journal Science.”

The update added that, “Fast-growing, sugar-rich seaweed has much to offer as a biomass feedstock. Unlike corn and sugar cane, it does not compete with food crops for land, and it does not require freshwater. What is more, seaweed does not contain lignin, a compound found in the cell walls of some plants like corn that enables them to stand up and is difficult to break down.”

Keith Good

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