Budget Issues, Payroll Tax
Daniel Newhauser reported yesterday at Roll Call Online that, “Republicans today dismissed Democrats’ proposal to include a package of expired tax extenders in the payroll tax cut conference committee.
“Rep. Dave Camp, the co-chairman of the committee, indicated that he does not think the group of about 80 tax provisions should be brought up as the panel looks to extend a payroll tax holiday, unemployment benefits and prevent cuts to doctors’ Medicare reimbursements.”
The article explained that, “Senate Majority Leader Harry Reid (D-Nev.) and Sen. Max Baucus (D-Mont.), the conference committee co-chairman, both said Tuesday they would like the group of 20 lawmakers to tackle as many of the tax extenders as possible.
“The measures include clean energy tax credits, deductions for tuition expenses, state and local taxes and teachers’ out-of-pocket expenses.
“House and Senate staffers from both sides of the aisle will be working over the weekend to lay out what exactly the scope of the committee should be. Camp said Tuesday, at the group’s first meeting, that the panel will use its second meeting on Feb. 1 to narrow down the topics that should be discussed in conference.”
Jonathan Weisman noted in yesterday’s New York Times that, “Presidential politics and a push by both sides to include pet measures could turn negotiations over the extension of President Obama’s payroll tax cut into the next partisan donnybrook on Capitol Hill, lawmakers made clear on Tuesday.”
Mr. Weisman pointed out that, “But negotiators are far apart in how to cover the $160 billion it would cost to maintain the cut, extend expiring unemployment benefits and avoid deep cuts in fees to doctors treating Medicare patients.
“They also differ on what other measures should be added to the legislation, which may be the last major bill that moves through Congress in an election year. Republicans said they wanted to include ‘job creation’ measures, including one blocking environmental regulations for commercial boilers and another forcing the construction of an oil pipeline from Canada to the Gulf of Mexico, which the Obama administration has blocked.”
Farm Bill and Policy Issues
DTN Ag Policy Editor Chris Clayton reported yesterday that, “Despite election-year rhetoric in Congress, House Agriculture Committee Chairman Frank Lucas still sees an opportunity to finish a farm bill in 2012, saying he feels a strong urgency to accomplish that goal.
“The Oklahoma Republican noted it would help if farm groups were able to come to some understandings on how commodity programs should work in the future.
“‘This is something I have been harping on privately to various groups and publicly,’ Lucas said in a phone interview Wednesday with DTN. ‘If we don’t come to some sort of a practical consensus, if we can’t march together; if we are fractured up then we’re lost. There is this perception outside the ag committee and ag community that we just automatically move in lock-step. That is not the case.’”
Mr. Clayton noted that, “The failed supercommittee process showed agricultural groups were divided over programs that would pay producers for shallow or steep losses, as well as whether target prices should be raised for crops and, if so, by how much. The bill crafted by the House and Senate Agriculture Committee leaders eliminated direct payments and used that $4.7 billion-a-year program not only for budget cuts but to craft a shallow-loss program, higher target prices and a stand-alone crop-insurance program for cotton producers.
“Having worked through three farm bills, Lucas noted there are always commodity and regional differences, but groups tend to come together and compromise. Through the supercommittee process last fall, Lucas said it was clear a one-size-fits-all bill would not work and options were needed in commodity programs.
“Several commodity and farm groups are set to have talks over the next week in Washington to see if they can come up with compromises and languages to satisfy their boards and member farmers.”
The DTN article added that, “One of the major questions is how USDA programs are affected by the budget-cutting act passed last summer. Automatic budget cuts to existing programs are set to take effect Jan. 1, 2013. Nutrition programs are exempt from those cuts, but it’s not clear how that will affect other farm bill programs. For instance, Conservation Reserve Program contracts may be exempt as well because they are multi-year contracts.
“‘The reason I bring this up is if big programs like nutrition are automatically left out and if big programs like CRP, because of the way they are put together, are exempt, then that just crams that much more cuts on everything else,’ Lucas said. ‘That does cause me heartburn, but it’s not clear yet how that’s going to work out.’”
Also yesterday, Ed Richards of the Radio Oklahoma Network interviewed Chairman Lucas via a telephone call (audio replay available here); an unofficial FarmPolicy.com transcript of this conversation is available here.
In part, Chairman Lucas noted that, “I’d remind my neighbors back home there are a lot of moving pieces in this process. I’ve got to not only work with my committee members, my ranking member, we’ve got to deal with the Senate and what they’re able to do on the other side of the body. There will be new scoring numbers from the Congressional Budget Office about how much money is available. There will be a budget resolution before too many months that will have to be addressed in the House. So we’ve got a long ways to go, but the hand has not completely been shown.”
The Ag Committee Chairman added that, “Ed, if I could tie down existing policy for one more year, if I could take the ’08 Farm Bill and just add one more year to it in the form of a complete extension, you bet that’s the direction I would go. This has been a very successful farm bill. Producers are generally – nobody’s ever universally happy with a farm bill – but are generally pleased. My problem there is in the new budget reality we work in, I don’t know that there would be enough money allocated to us in this coming year to just do what we’ve been doing and move it forward.
“But if we can’t get a farm bill done in 2012, then our listeners are very well aware the old farm bill starts to expire at the end of September this coming fall. If we can’t get a farm bill, then yes, the fall back is an extension. And short of that, then, trying to address, in a lame duck session of Congress after the November general election, which is the worst-case scenario. I think my neighbors, when they put their fall crops in the ground, want to know what the programs are, they want to know what the rules are, and I want them to know that, too. I just…there’s so many things in the air, I just can’t say with any certainty, Ed.” (Note that yesterday’s interview with Ed Richards also discussed issues associated with MF Global).
Meanwhile, a news release earlier this week from Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) noted in part that, “I was pleased to once again attend the State of the Union with Senator [Pat] Roberts, the top Republican on the Agriculture Committee, to help urge bipartisan cooperation in Washington. Last year, the Agriculture Committee was the only Committee to develop a detailed bipartisan proposal to cut billions from our budget while strengthening initiatives that help farmers and businesses create new jobs. For the good of our country, Members of Congress must rise above election-year politics and come together to revitalize the economy, and I am confident the Agriculture Committee will continue to show this kind of leadership.”
And on Tuesday, Ryan Johnson reported at that Grand Forks Herald Online (N.D.) that, “Newt Gingrich and Mitt Romney called for the end of federal sugar subsidies during Monday’s Republican presidential debate in Florida, but Sen. Kent Conrad, D-N.D., said Tuesday that the comments show the candidates are spreading ‘misinformation’ about a vital program that does not subsidize the sugar industry.
“‘There is no cost to the government at all from the sugar program,’ he said. ‘The sugar program is critically important to tens of thousands of jobs in this country. They say they care about jobs; how about jobs in rural America?’”
The article indicated that, “Rep. Rick Berg, R-N.D., defended the sugar program and said it helps keep sugar prices stable, allowing North Dakota farmers to remain competitive…[and]…Sen. Al Franken, D-Minn., said he will stand behind the program that has done a lot of good for his state and led to economic vitality for farmers.”
Marino Eccher reported earlier this week at the Forum Online (N.D.) that, “Rep. Collin Peterson, the ranking Democrat on the House agriculture committee, said the [sugar] program safeguards growers against catastrophe.
“‘The government isn’t guaranteeing anybody a profit. They’re just guaranteeing the industry can exist when the market collapses through no fault of their own,’ said Peterson, who represents the Congressional district that includes Moorhead.
“Peterson said agriculture programs are common political targets as the country becomes more urbanized. The sugar program hasn’t faced a serious challenge in Congress in recent years, but Peterson said it also hasn’t faced a test vote with the current membership. The current federal farm bill expires at the end of this year.”
In other news, a news release yesterday from Rep. Rick Crawford (R., Ark.) stated that, “Today, Congressman Crawford and Congressman Sanford Bishop, (D-GA) announced that they have co-founded the bipartisan Congressional Chicken Caucus. The Chicken Caucus will educate members of Congress and their staffs on the concerns and benefits of the U.S. chicken industry.”
In an update posted yesterday at the USDA Blog, Deputy Secretary Kathleen Merrigan indicated that, “As I’ve traveled the country, I’ve talked with more and more consumers who want a personal relationship with their food and are demanding to know more about it, where it came from and how it got to their plate. I’ve also talked with more and more producers who see the growing market demand for local food as a ripe business opportunity. One of USDA’s goals is to connect the two.
“We know that the local foods business is booming. For instance, a recent study by USDA’s Economic Research Service (ERS) reported that marketing of local foods by both direct-to-consumer and wholesale buyers grossed $4.8 billion in 2008. And in 2011 alone, we’ve counted over 7,100 operating farmers markets in the country, and over 170 food hubs.
“For the past two and half years, via the Know Your Farmer, Know Your Food Initiative (KYF), the USDA has developed interagency partnerships to support the development of local food systems.”
And, over the past couple of days, both the Theodore Roosevelt Conservation Partnership and Advanced Biofuels USA set out specific policy recommendations relating to the future development of U.S. agricultural policy.
In news regarding nutrition issues, Bill Tomson reported in today’s Wall Street Journal that, “First lady Michelle Obama unveiled new nutrition rules for school meals Wednesday in an effort to combat the nation’s high rate of childhood obesity.
“Schools will have to offer students more fruits, vegetables and whole grains—a shift they worry will raise meal costs. And for the first time, the Department of Agriculture is setting calorie limits on school-cafeteria meals.”
United Fresh, the Kids’ Safe and Healthful Foods Project, the National Milk Producers Federation, and the International Dairy Foods Association all issued news updates yesterday related to this USDA development.
Dina ElBoghdady reported in today’s Washington Post that, “School cafeterias will be serving more-nutritious meals with twice as many fruits and vegetables, more whole grains and less sodium and fat under new guidelines that will revamp the federally backed school meals program for the first time in 15 years.
“The meals will continue to include pizza and french fries because Congress, after heavy lobbying from the food industry, derailed the Obama administration’s original plan to limit tomato paste and starchy vegetables such as potatoes.
“Even so, consumer groups hailed the changes as a major improvement over the current standards, echoing remarks by first lady Michelle Obama when she unveiled the new nutrition rules Wednesday at Parklawn Elementary School in the Alexandria section of Fairfax County.”
Ron Nixon pointed out in today’s New York Times that, “About 32 million children participate in school meal programs each day. The new rules are a major component of Mrs. Obama’s campaign to reduce the number of overweight children through exercise and better nutrition.”
In other policy developments, Howard Schneider reported in today’s Washington Post that, “After years that have seen riots over rice shortages in Asia and record low world reserves of staple crops such as wheat, software-billionaire-turned-philanthropist Bill Gates argues that there is a simple solution.
“Grow more food.
“In a new push for the Gates Foundation, the Microsoft chairman is focusing on basic research on crops such as cassava that hold little interest for the world’s agriculture multinationals but which are important for family farmers in some developing nations.”
Commodity Futures Trading Commission (CFTC)
A news release yesterday from the House Agriculture Committee stated that, “Today, the House Agriculture Committee advanced by voice vote six bills that amend Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The legislation is the culmination of the committee’s oversight efforts of the Commodity Futures Trading Commission (CFTC) as it writes rules for Dodd-Frank. In the past year, the committee has held seven hearings on Title VII that have included testimony from market participants. They have shared consistent concerns that the CFTC is overreaching in its rulemaking and it will have a negative impact on businesses and on the economy.”
Ian Talley reported in yesterday’s Wall Street Journal that, “The global economy is slowing this year, the International Monetary Fund said on Tuesday, cutting its forecasts for growth and warning of a deeper downturn if Europe doesn’t take stronger action to stem its debt crisis.
“The global economy will expand 3.3%, this year, down from 3.8% last year, said the IMF, which in September had forecast 4% growth in 2012.”
Bloomberg writer Alan Bjerga reported yesterday that, “U.S. consumers will pay 2.5 percent to 3.5 percent more for food in 2012, the Department of Agriculture said, affirming its December forecast.”
And Dow Jones news reported yesterday that, “Bank operating loans for U.S. farmers fell sharply in the fourth quarter versus a year ago in part because of strong farm income, the Federal Reserve Bank of Kansas City said.
“Non-real estate loans to farmers fell 40%, the K.C. Fed said, ‘as more farmers paid cash for production expenses.’ High prices for crops have boosted farmer income during the past couple of years, even as the cost of items such as fertilizer and seed have risen. The high crop prices have helped drive U.S. farmland prices to record highs.”
Ian Berry and Andrew Johnson Jr. reported in today’s Wall Street Journal that, “Drought may have ravaged key wheat-growing areas across the U.S. last year, but farmers still planted a surprisingly large crop this past fall, despite the dry soil…In all, the amount of the crop known as winter wheat that U.S. farmers planted was 41.9 million acres, up 3% from 2010, according to the latest data from the U.S. Department of Agriculture.”
A news release yesterday from the National Pork Producers Council stated that, “A coalition of food and agricultural organizations led by the National Pork Producers Council expressed in a letter sent yesterday to the Office of the U.S. Trade Representative its support for a free trade agreement between the United States and the European Union.
“Such an FTA is a likely option to be considered by a joint international working group on jobs and growth chaired by USTR Ambassador Ron Kirk and EU Trade Commissioner Karel De Gucht.”
A news release yesterday from the House Agriculture Committee stated that, “In his State of the Union Address last night, President Obama addressed criticisms of over-regulation by his administration. He claimed success for exempting dairy farmers from an Oil Spill Prevention, Control and Countermeasure (SPCC) program mandate that would have regulated milk the same way as oil:
“‘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.’”
The release added that, “The truth is that the Obama administration actually withdrew the Bush administration’s proposal to exempt dairy farmers from oil spill regulations, and then delayed their decision on this exemption for nearly two years.
“In contrast, House Republicans responded to dairy farmers’ concerns and introduced legislation to force the Environmental Protection Agency (EPA) to finalize the dairy exemption.
“Meanwhile, the president made no mention of other equally preposterous regulations that our farmers and ranchers still face.”