FarmPolicy

September 2, 2014

Farm Bill; Regulation; and Trade

Categories: Audio /Budget /Farm Bill /Trade

Farm Bill- Budget Deficit Issue: Background

Federal spending priorities, although always an important consideration, have increasingly become a salient political variable since the financial collapse of 2008.  Federal policies to stabilize markets following the U.S. economic meltdown, implemented by both the Bush and Obama administrations, were extremely costly and not without controversy.  Projected costs and savings contained in the Patient Protection and Affordable Care Act, which became law in March of 2010, followed by a Tea Party infused midterm election, only served to heighten the budget issue as a potent political consideration for lawmakers.

Following the 2010 elections, voters observed ongoing negotiations between the GOP Congress and the Obama administration over the issue of the federal debt (see “Obama vs. Boehner: Who Killed the Debt Deal?”) where a “grand bargain” on federal tax and spending issues was never reached.  The negotiations culminated last summer in the creation of the “Super Committee,” which itself failed in November. In the meantime, the U.S. had it its credit rating downgraded.

And earlier this year, a skirmish over payroll tax cuts and unemployment benefits between the executive and the legislative branch was finally settled after another dust-up over the federal deficit.

Last month, the House of Representatives passed a FY 2013 budget outline which has now become an issue in the 2012 presidential campaign- last week President Barack Obama sharply criticized it, while the presumptive GOP nominee Mitt Romney embraced it.

Farm Bill: Budget- SNAP

These issues regarding fiscal distress have led to what may be unmatched budgetary pressure in drafting a Farm Bill.  And, since nearly 80% of Farm Bill spending goes to nutrition related programs, these programs have garnered a significant amount of attention.

A news release from the House Agriculture Committee Democrats last month pointed out that, “The FY2013 Republican Budget Resolution cuts $179.4 billion from farm bill programs over ten years.  The Budget Resolution makes the following cuts to programs under Agriculture Committee jurisdiction: Commodity Programs – $29.3 billion; SNAP [food stamps] – $134 billion; [and] Unspecified – $16.1 billion (Believed to be from Conservation Programs).”

Politico writer David Rogers reported last month that, “The effective date for the [House Budget] legislation is July 1 — an impossible schedule, given the anticipated opposition in the Senate. And the first casualty could be the House Agriculture Committee, trying to write a bipartisan five-year farm bill and now diverted into what promises to be a divisive fight over food stamp cuts.”

Also on the SNAP issue, Erin Billups reported last week at YNN (Syracuse, NY) Online that, “A House GOP aide, though, says SNAP takes up about 80 percent of spending in the Farm Bill and there’s plenty of fraud, abuse and inefficiencies that can be eliminated without compromising the integrity program.”

In related news, Jason DeParle reported in yesterday’s New York Times that, “Perhaps no law in the past generation has drawn more praise than the drive to ‘end welfare as we know it,’ which joined the late-’90s economic boom to send caseloads plunging, employment rates rising and officials of both parties hailing the virtues of tough love.

“But the distress of the last four years has added a cautionary postscript: much as overlooked critics of the restrictions once warned, a program that built its reputation when times were good offered little help when jobs disappeared. Despite the worst economy in decades, the cash welfare rolls have barely budged.”

Specifically, the article stated that, “To keep her lights on, Rosa Pena, 24, sold the groceries she bought with food stamps and then kept her children fed with school lunches and help from neighbors. Her post-welfare credo is widely shared: ‘I’ll do what I have to do’…[A]sked how they survived without cash aid, virtually all of the women interviewed here said they had sold food stamps, getting 50 cents for every dollar of groceries they let others buy with their benefit cards. Many turned to food banks and churches.”

The Times article noted that, “Since the states get fixed federal grants, any caseload growth comes at their own expense. By contrast, the federal government pays the entire food stamp bill no matter how many people enroll; states encourage applications, and the rolls have reached record highs.”

 

Farm Bill: Budget- Looking Ahead

Recall that the Budget Control Act of 2011,which authorized the “Supercommittee” process, included a “sequestration” trigger.  As Walter Pincus explained recently in The Washington Post, “On Jan. 2, 2013, [the sequestration] will kick in if Congress can’t reach agreement before then on $1.2 trillion in cuts or added revenue over the next 10 years. Sequestration will be avoided if Congress passes legislation that President Obama will sign that undoes the legal requirement in the 2011 Budget Control Act.

“Otherwise, on Jan. 2 the government must begin imposing the first of 10 years of across-the-board reductions in discretionary spending accounts for defense ($500 billion) and non-defense ($700 billion).”

But, as the “Washington Insider” section of DTN (link requires subscription) explained recently, “[T]he House passed by unanimous consent its budget resolution for FY 2013 with its built-in effort to cancel the defense cuts scheduled under last fall’s Budget Control Act. To protect the Pentagon, it includes reconciliation instructions for six House committees, including Agriculture. For these, the House strategy includes cuts much more stringent than those in the administration budget — or, in the ag leaders’ proposals last year, for that matter.”

David Rogers added at Politico last month, “With their budget in hand, House Republicans now face an intense two months of committee activity in which spending cuts must be fleshed out together with a quick-strike deficit-reduction package intended to substitute for automatic reductions from defense in January.”

“When lawmakers return in mid-April from their spring recess, House and Senate Appropriations committees will have to write their annual spending bills using two sets of instructions — instead of one as envisioned under the Budget Control Act. And the Republican resolution gives six other House committees an April 27 deadline to come up with an additional $261 billion in 10-year savings to forestall a January sequester from defense — also under the BCA.”

Meanwhile, some policy observers have been critical of Senate leadership for not bringing a budget to a vote.

Appearing on yesterday’s Fox News Sunday television program, Senate Budget Committee Chairman Kent Conrad (D., N.D.) pointed out that, “What the Budget Control Act does is stand in place of a budget resolution. It has in its language what’s called a deeming resolution and it says very clearly that the spending limits put in place by the Budget Control Act are the spending limits just as a budget resolution would provide them but it’s stronger, because a budget resolution is purely a congressional document. It never goes to the president for signature.  The Budget Control Act is law and not only sets a limit for this year and next. It sets spending limits for 10 years.”

Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “[Chairman Conrad] also said it would be unlikely that the two chambers could reach a compromise on spending before November so a vote on a budget plan his panel would approve ‘won’t happen with a vote on Senate floor before the election.’”

More specifically, Chairman Conrad indicated that, “I think — you know, you just had a vote on Bowles-Simpson on the House, [which] only got 37 votes because I think that demonstrates both sides are unwilling to come together before the election. But after the election, when we’re faced with all tax cuts expiring and we’re faced with a sequester — that would be the time that people have more open minds.”

(Note: To listen to the full segment with Chairman Conrad, Fox News guest host Brit Hume, and Sen. Ron Johnson (R., Wis.), just click here (MP3- 13:00)).

Along these lines, James B. Stewart observed in Saturday’s New York Times, “While no one wants to admit it, within the Ryan budget proposal is the outline of a grand compromise not all that different from the one President Obama and House Speaker John Boehner reportedly came close to reaching last summer: long-term deficit reduction through tax reform, higher tax revenue and spending cuts.”

In other Farm Bill related news, David Bennett reported last week at the Delta Farm Press Online, “Will a farm bill pass this year?

“Despite a series of House Agriculture Committee hearings and an expectation that the Senate Agriculture Committee will begin writing the legislation in mid-April, lawmakers have recently been tamping down chances for passage.”

The news item quoted Chuck Conner, president of the National Council of Farmer Cooperatives, as saying, “So, we remain hopeful but the obstacles are enormous. It is an election year – that in and of itself is a huge obstacle. Congress typically does very little in presidential election years.”

Carl Burnett Jr. reported on Friday at the Lancaster Eagle Gazette (Ohio) Online that, “Don’t expect anything major to be decided in Congress before the November election.

“That’s a message U.S. Rep. Steve Stivers [R., Ohio] presented to a group of farmers Thursday.”

The article noted that, “As for the status of the farm bill before Congress, Stivers said he didn’t think it would be passed, either.”

“Before the election, Stivers said he really didn’t expect to see a budget passed. After the November election, he said there would be room for compromise, regardless of who wins the presidency,” the article said.

An editorial Friday, which was posted at the Hutchinson News (Kan.) Online, stated that, “With budgets tightening in Washington, the nation’s farm program needs to transition from subsidies to safety net.

“We need to protect our farmers against adverse conditions, which always has been the intent of the federal farm program, dating to its inception in 1933. Somehow we got away from that with a program that simply paid farmers subsidies without regard to whether they really needed it.

“That seems likely to change as the current Farm Bill sunsets Sept. 30 and Sen. Pat Roberts of Kansas and others work on its replacement.”

The opinion item added that, “It is good to see Roberts, a longtime champion of agriculture, focus on a strong crop insurance program even if other farm supports dry up.

“‘We are trying to reform’ the farm program, Roberts told The Hutchinson News’ Amy Bickel in Washington last month. Roberts noted that if ever there was a time that demonstrated the need for crop insurance it was last year when a brutal summer wiped out crops.”

Unfortunately even crop insurance is under attack. Nearly $12 billion was slashed last year, and the White House has proposed cutting another $8 billion.

Key members of Congress such as Roberts would be wise to yield more on direct subsidies in order to preserve crop insurance, which is the real safety net,” the editorial said.

 

Regulation

Pam Louwagie reported over the weekend at the Minneapolis Star-Tribune Online that, “Tristan Grangroth grinned as the big tractor roared to life. Sitting in the driver’s seat at age 14, he loves the power of controlling the huge machine, churning up fields of a neighbor’s farm where he has worked for years.

He’s not happy — nor is his employer — with proposed new federal rules that would, in the name of safety, further limit the kinds of hired farm work that he can do at his age.

“‘You just use common sense and you’re fine,’ Grangroth said, the brim of his cap nearly hiding his round face.”

The article stated that, “The U.S. Department of Labor is proposing the new rules to protect hired young farm workers from doing a range of tasks deemed most hazardous, from loading logs to climbing silos. The step has spread unease across swaths of farm country, where up to 56,000 young workers could be affected. Agricultural leaders say the rules will chip away at a cornerstone of American life by keeping youngsters from taking an interest in the business and preventing them from learning responsibility.

“‘If kids have to wait until they’re 16, 18 years old to learn how to handle equipment and breed animals, they might go decide to do something else,’ said Thom Petersen, director of government relations for the Minnesota Farmers Union, which represents more than 11,000 farm families in the state. ‘Farm safety is a number-one issue on most farms and for every farmer I know. But on the other hand, so is bringing in the next generation.’”

Ms. Louwagie added that, “Rep. Tom Latham, R-Iowa, called the rules an ‘attack’ on an American tradition. ‘The armies of federal bureaucrats who spend day after day drawing up new regulations have now set their sights on the institution of the family farm,’ he said in a news release.

The Labor Department is reviewing the comments and hasn’t set a timeline for finalizing or implementing rules. The department is also considering whether to exempt children of parents who are partial owners of farms. It is expected to propose new rules and take public comments on that question sometime this summer.”

 

Trade

Sudeep Reddy reported on Friday at The Wall Street Journal Online that, “Russia is on the cusp of joining the World Trade Organization after a two-decade journey, a landmark move to integrate the emerging economy into the international trading system.

“There’s one problem for U.S. companies: They may be left out of the parade.

Election-year sparring could keep the U.S. from lifting long-standing restrictions on trade with Russia by the time the country joins the WTO this summer. As a result, U.S. companies wouldn’t receive the same legal protections against Russian tariffs and other hurdles to business that companies from other countries would gain, putting the U.S. businesses at a competitive disadvantage, executives say.”

The Journal article added that, “The largest business groups in the U.S., including the U.S. Chamber of Commerce, say passing legislation to lift the U.S. restrictions is their No. 1 trade goal this year. Dozens of smaller organizations, including the National Chicken Council and the Toy Industry Association, are lobbying lawmakers too.”

At issue is the Jackson-Vanik amendment, a Cold War measure that restricts U.S. trade relations with nations that limit emigration. Congress passed the law in 1974 to ensure that Jews could leave the Soviet Union freely. That hasn’t been a problem since the Soviet Union collapsed, and U.S. administrations have waived the measure’s restrictions annually for Russia since the early 1990s.”

The Journal article indicated that, “But unless the U.S. repeals Jackson-Vanik permanently for Russia—annual waivers aren’t sufficient—Moscow still could maintain high tariffs on U.S. products and keep other hurdles against U.S. companies that want access to Russia’s 140 million consumers.”

Keith Good

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