Budget- Payroll Tax
Erik Wasson reported yesterday at The Hill Online that, “Anxious Republicans plan to use President Obama’s soon-to-be-released budget as a rallying cry to unify their party, which has been fractured over the last couple of months.
“Democrats were largely seen as the political winners of December and January, as the GOP fumbled the payroll-tax issue and Obama’s approval ratings improved.
“February, Republicans believe, will be different. They claim that Obama’s budget will return the nation’s focus to fiscal issues, a traditional GOP stronghold.”
The article added that, “While House Republicans are now crafting their fiscal 2013 budget resolution, Senate Majority Leader Harry Reid (D-Nev.) said Friday that Democrats in the upper chamber will not try to pass such a measure on the floor.”
Pete Kasperowicz reported yesterday at the Hill’s Floor Action Blog that, “The House on Wednesday approved legislation that would allow Congress to quickly consider budget rescission recommendations made by the president, a proposal that many Republicans and Democrats said could help reduce the budget deficit.
“Members approved the Expedited Legislative Line-Item Veto and Rescissions Act, H.R. 3521, by a 254-173 vote.
“The bill split both parties considerably, but support from most Republicans and several dozen Democrats allowed it to pass by a healthy margin. Among Republicans, the vote was 197-41 in favor of the bill, and among Democrats, the vote was 57-132 against.”
Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Supporters of the legislative line-item veto bill being voted on in the House on Wednesday are planning a showdown with appropriators in the Senate soon on that chamber’s version of the bill.”
The update pointed out that, “Senate Majority Leader Harry Reid (D-Nev.) has not staked out a position on the bill and no plans for a markup in the Senate Budget panel have been set. Senate Minority Leader Mitch McConnell (R-Ky.), however, does support the bill, his office said Wednesday.
“Aides said Wednesday that sponsors will try to offer the bill as an amendment to must-pass legislation soon.”
On the payroll tax issue, Daniel Newhauser reported today at Roll Call Online that, “As talks stalled Wednesday, Members of Congress on the payroll tax cut conference committee began to acknowledge that negotiations might have to go behind closed doors for any real work to get done.”
The article added that, “Most of the contentious issues surrounding the extension of a payroll tax holiday and a lapse in Medicare payments to doctors remained unsettled, and Republican conferees said they were still awaiting an offer on unemployment insurance issues from Senate Finance Chairman Max Baucus (D-Mont.).”
The Center for a Responsible Federal Budget recently highlighted an outline of general principles that could potentially be considered as part of the payroll tax discussions.
Meanwhile, Nebraska GOP Senator Mike Johanns was a guest on yesterday’s AgriTalk radio program with Mike Adams. An unofficial transcript of their conversation is available here.
In part, their discussion focused on the payroll tax issue and Sen. Johanns indicated that, “All I can say is we’re already borrowing 42 cents on every dollar; when do they want to stop? There is a point at which we’ve got to pay for the things we’re doing, and I think that’s where the arm wrestling is occurring, right on that line between people who say, look, we’ve got to start minding the store here and paying the bills and others saying, no, we can just keep on borrowing. And that is not an easy philosophical difference of opinion to resolve, and so I’m concerned that we may not get there.
“Although in the vein of full disclosure, Mike, I’m not a big fan of cutting the payroll tax because Social Security is in trouble, and I think when you mess around with the payroll tax, you risk the future security of this program, Social Security. So I think this one is a tough one, and I’m not going to try to pull out my crystal ball on this one. I think this one could go either way.”
On yesterday’s Agriculture Today radio program (The Red River Farm Network), Mike Hergert filed a Farm Bill focus report from Washington, D.C. that included analysis and observations from House Agriculture Committee Chairman Frank Lucas (R., Okla.). Chairman Lucas focused his remarks on the budget and Title I of the Farm Bill, to listen to this portion of yesterday’s Agriculture Today program, just click here (MP3- 2:15).
As was noted earlier, Sen. Mike Johanns was on yesterday’s AgriTalk program with Mike Adams where the conversation also turned to the Farm Bill. An unofficial transcript of their conversation is available here, while an audio replay of the Senator’s appearance yesterday can be heard here (MP3-10:07).
Sen. Johanns stated that, “I think everybody is agreed today that this will be led on the Senate side. That’s very unusual. As you know, typically the House writes the farm bill and the Senate may do some fine-tuning. I really do believe that the Senate is going to take the first steps on the farm bill. That’s already happened. We’ve done six hearings. I think there will be probably another four here pretty quickly in the weeks ahead.
“I think on the Senate side my sense is that we could get a majority to pass a bill out of committee, maybe even much stronger than a majority. I think we could put coalitions together to maybe move something, and then it will be on the House side. And one of the challenges you always have is there’s a lot of new members over there who have never been in a farm bill process, and it’s kind of a unique process.
“But here’s what I want to emphasize. For all of those folks out there beating up on agriculture and this and that, and whatever it is, the talk of the day, 83% of this bill today is food stamps, the SNAP program, free and reduced lunch at schools, and the WIC program. The farm programs are really a footnote anymore, and on two out of three of the programs, you’re not paying anything because prices have been good. And farmers get that. They understand. They’ve always wanted to farm for the marketplace. So I just think the whole issue here is going to be let’s get a farm bill that’s good on risk management. I like crop insurance. I’m not so worried about direct payments.”
With respect to Senate Farm Bill activity, an update yesterday from the Senate Agriculture Committee provided additional details on next Wednesday’s hearing, noting that Secretary of Agriculture Tom Vilsack, among others, will testify.
More specifically on crop insurance, former USDA Chief Economist Keith Collins penned an opinion item yesterday (“Crop insurance’s growing value”) at The News & Observer Online (Raleigh, NC) which indicated that, “As a former chief economist for the U.S. Department of Agriculture I can attest to the fact that farming is indeed a risky business. News reports out of USDA’s Risk Management Agency underscore that point all too clearly: With some 15 percent of all crop insurance claims yet to be processed, crop insurance companies have paid out a record $9.1 billion so far in indemnity payments to America’s farmers for 2011 crop losses, surpassing the record set in 2008 by nearly half-a-billion dollars. And the 2011 figure will continue to climb.
“But the economist in me wanted to dig into the data to better understand the damages reflected by the overall numbers. And there were a number of surprises. Most people might expect that, given the severity of the drought in the southern plains, farms with the greatest damages per dollar of premium for insurance would be there. But while farmers in those states did suffer greatly, it was actually the farmers in Vermont who saw the highest loss ratio last year.”
Dr. Collins explained that, “But despite the success of the crop insurance program, many in Congress will be seeking even deeper cuts to this primary risk-management tool, even though program funding has already been reduced by $12 billion since 2008. Congress and the Obama administration need to remember that farm income stabilization through risk management programs like crop insurance is critical for ensuring continuous and stable growth in overall supplies of food, feed and, increasingly, fuel.
“In the not too distant past, when Mother Nature struck America’s agriculture sector, it often resulted in ad hoc disaster packages from Congress to address the damage and help the farming sector recover. While those packages were greatly appreciated by farmers, Congress decided to push to make crop insurance more universally available and affordable, giving farmers the tools they need to manage their own risks while taking some of the burden of disaster assistance off the back of the public and putting it onto the lap of the private sector.
“Today’s crop insurance policy makes more sense and works better because it puts the onus of managing risk on producers and farmers, not the government. The private sector crop insurance agent works directly with the producer to help put together an insurance plan that best meets their specific needs and is tailored to their comfort with risk. The outcome is a plan that protects physical and financial assets in the face of natural hazards and market risks.”
In news regarding nutrition, David Brown reported in today’s Washington Post that, “The amount of trans fat in the American bloodstream fell by more than half after the Food and Drug Administration required food manufacturers to label how much of the unhealthful ingredient is in their products, according to a new study.
“Blood levels of trans fat declined 58 percent from 2000 to 2008. FDA began requiring trans-fat labeling in 2003. During the same period several parts of the country — New York most famously — passed laws limiting trans fats in restaurant food and cooking. The makers of processed food also voluntarily replaced trans fats with less harmful oils.”
Reuters writer Christine Stebbins reported earlier this week that, “Illinois, a key farm state in the heart of the Corn Belt, is basking in its sixth warmest winter in 117 years — good news for residents who have not had to shovel snow but a red flag for some of the state’s most productive businesses: farms.
“Illinois and neighboring Iowa – also in the midst of a balmy winter – produce about a third of all the corn and soybeans grown in the United States, the world’s largest exporter of both crops. Farmers in both states feel more comfortable when there is a substantial snow cover to ensure adequate soil moisture that can nurture crops through the region’s hot dry summers.”
University of Illinois Agricultural Economists Scott Irwin and Darrel Good indicated in an update yesterday at the farmdoc daily blog (“The Historic Pattern of U.S Soybean Yields, Any Implications for 2012?”) that, “Like the U.S. average corn yield, the U.S. average soybean yield was below trend value in 2011. Market sentiment favors a return to trend yield for soybeans in 2012. Here we examine the pattern of yields from 1960 through 2011 (Figure 1) to identify any patterns that might be helpful in forming expectations for 2012. See our earlier post for similar observations about corn yield in 2012.”
After additional analysis, the update noted that, “For any particular year, including 2012, history suggests a 60 percent chance of an average U.S. soybean yield above trend and a 40 percent chance of an average yield below trend value. The odds slightly favor a soybean yield above trend in 2012, but there is precedent for another year below trend. More specific expectations about the 2012 average yield will depend on how the planting and growing season unfolds.”
And the AP reported today that, “Consumers should expect higher beef prices for the next two years due to the smallest cattle herd in 60 years, and it’s unclear whether costs will drop in later years because growing demand could keep supplies tight even as ranchers breed more animals.
“Experts said retail prices for beef could climb as much as 10 percent a year in 2012 and 2013, and the increase could be even greater if demand from other countries increases.”
Regulations: EPA, CFTC
An update yesterday from the House Agriculture Committee stated that, “This week during The Ag Minute [MP3], guest host Rep. Tom Rooney discusses the Environmental Protection Agency’s (EPA) growing trend of developing public policy as the result of lawsuit settlements. This defective method of putting in place regulations that circumvent the public rulemaking process can negatively impact the agriculture community. Rep. Rooney highlights one such example with the proposed Concentrated Animal Feeding Operations (CAFOs) Reporting Rule.”
Meanwhile, Reuters writer Christopher Doering reported earlier this week that, “The financial industry asked a federal court late on Tuesday to temporarily block regulations approved by the U.S. futures regulator aimed at preventing excessive speculation in commodity markets such as oil and gold.
“The Securities Industry and Financial Markets Association (SIFMA) and the International Swaps and Derivatives Association (ISDA) told the court if the U.S. Commodity Futures Trading Commission’s rules go into effect they would irreparably harm their members and the public.”
Bloomberg writer Linda Sandler reported earlier this week that, “MF Global Holdings Ltd.’s insurance unit issued $190 million of liability policies for Jon Corzine, other professionals and the company through May to cover costs of defending against allegations of wrongdoing, according to a court filing.
“The wholly owned unit, MFG Assurance, provided $70 million of coverage for MF Global, its units and professionals for lawsuits through May 2011, and $120 million for the period through May of this year, trustee Louis Freeh said in the Feb. 3 filing in U.S. Bankruptcy Court in Manhattan. The policies don’t belong to the bankrupt estate and the coverage should be continued, he said.
“Corzine, the bankrupt company’s former chief executive officer, and other executives are facing two potential class- action suits over the company’s Oct. 31 collapse.”
And Jacob Bunge reported in today’s Wall Street Journal that, “More than three months after the collapse of MF Global Holdings Ltd., fallout continues to beset the collapsed futures firm’s front-line regulator, CME Group Inc.
“The Chicago-based futures exchange on Wednesday saw its credit rating cut by Standard & Poor’s and could face further downgrades because of reputational damage linked to the Oct. 31 collapse of MF Global. Standard & Poor’s Ratings Services cut CME’s long-term rating by a notch to double-A-minus, citing the potential cost of a financial safety net established for clients in the wake of the unfolding controversy surrounding the MF Global bankruptcy.”
Brian Spegele reported in today’s Wall Street Journal that, “Prime Minister Stephen Harper of Canada pledged closer trade ties with China during a meeting with Premier Wen Jiabao on Wednesday, even as he pressed Beijing over its recent decision to block a United Nations Security Council resolution against Syria’s government.
“The trip is part of a broader strategic push by Canada to more closely align itself with China and reduce its reliance on the U.S. Mr. Harper aims to increase Canada’s capacity to export oil and other resources to China, an effort that has intensified following the Obama administration’s decision to reject for now TransCanada Corp.’s Keystone XL pipeline, which would have shipped oil-sands crude from Alberta to the U.S. Gulf Coast.”
In his interview yesterday on AgriTalk, Sen. Johanns addressed issues associated with the Keystone pipeline, as well as the South Korea Free Trade Agreement.