FarmPolicy

July 23, 2014

Farm Bill; Budget (Estate Tax); and, the Ag Economy

Farm Bill

Philip Brasher reported on Friday at Roll Call Online that, “A deal to avert the fiscal cliff could pave the way for the new Congress to pass a farm bill next year, House Agriculture Chairman Frank D. Lucas says.

“In an interview Thursday with an Oklahoma radio station [transcript], Lucas gave two options for dealing with the farm bill as part of a tax increase and spending cuts deal between the White House and Congress. One would be to drop a new farm bill into the fiscal package, which could still be a long shot given the challenges of marrying the House and Senate versions with only three weeks left in the lame duck.”

Mr. Brasher explained that, “The second option, and the one on which the Oklahoma Republican notably went into some detail, would call for writing provisions into the fiscal package to extend the expired 2008 farm law into 2013 and set a target for budget savings that the new bill would have to achieve. The new bill could then be finished next spring in expedited fashion as part of a broader budget reconciliation process needed to implement the cuts and revenue increases that would be called for in a fiscal agreement.

“A reconciliation bill goes to the floor for an up-or-down vote, with little opportunity for amendment. That could protect the farm bill on the House floor from the inevitable attacks on commodity price supports.”

Also note that an interview with Chairman Lucas is featured on this week’s Agri-Pulse “Open Mic” program.

An Agri-Pulse summary of that interview, which can be heard here, indicated that, “Oklahoma Republican Frank Lucas joins us again on Agri-Pulse Open Mic to discuss the current state of the farm bill negotiations and how the savings from reforms advanced by his committee could become part of the so-called fiscal cliff negotiations as a down payment on the nations debt, either this year or next. But Lucas, who was elected last week for a second term as House Agriculture Committee Chairman says much depends on ongoing negotiations between President Barack Obama and House Speaker John Boehner.”

In addition, David Rogers reported on Friday at Politico that, “In a major shift to try to save a five-year farm bill, Sen. Pat Roberts (R-Kan.) said Friday he is now prepared to compromise on the commodity title and accept target price supports important to Southern producers and their allies in Congress.

“‘I’m willing to compromise on whatever they think they can get through and live with in regard to target prices,’ Roberts told POLITICO. ‘Because I have to have the crop insurance or my guys are really going to suffer.’”

Mr. Rogers pointed out that, “In White House talks, Obama has signaled a greater willingness to consider more savings from food stamps as part of the farm package. And as the farm bill’s authors compete for the leadership’s attention, savings from crop insurance — by trimming premium subsidies — are in the mix.

“But for Roberts, an early advocate of crop insurance in Congress, the core program and improvements made in the Senate bill are hugely important given the severe weather his own growers have endured at home.

“‘There are a lot of things in the five-year farm bill that are absolutely essential,’ Roberts said in the interview. ‘For me it’s crop insurance, because we’ve been through a two-year drought and now we’re headed for three. We would just be in terrible shape if we didn’t keep the improvements to crop insurance.’”

James Rainey noted over the weekend at the Los Angeles Times Online that, “But the five-year, $500-million agricultural law has its own controversial elements — including proposed cuts in food stamps. The program, officially known as Supplemental Nutrition Assistance Program, or SNAP, grew to $76 billion annually in 2011, double what it was three years prior. Persistent unemployment and expanded eligibility under President Obama’s 2009 stimulus bill spurred the increases.

“A version of the farm bill passed by the House agriculture committee envisions a $1.6-billion annual cut in the food stamp program — four times greater than a cut already approved in the Senate version of the legislation.”

Meanwhile, in an exchange on the House floor on Friday (video replay, full transcript), Majority Leader Eric Cantor (R., Va.) noted in response to an inquiry from Democratic Whip Steny Hoyer (D., Md.) that, “I [Cantor] would tell the gentleman that both the Speaker and I have both said that we will deal with the issue of the farm bill or the issue in and around the farm bill before leaving this year…But on both sides of the Capitol, we look forward to hopefully reaching some type of resolution on issues surrounding the farm bill prior to leaving this year.”

Also on the House floor Friday, Rep. Agriculture Committee Member Peter Welch (D., Vt.) noted (video replay, full transcript) that, “The decision on whether we will vote on a farm bill is up to the leadership. They owe it to each one of us so we can be accountable to the people we represent and give America a farm bill. There is absolutely no excuse for Congress to not even try to do its job, which will occur when a farm bill is brought to the floor.”

A news release Thursday from Sen. Al Franken (D., Minn.) stated that, “In an effort to help farmers across Minnesota who are facing uncertainty because a new Farm Bill hasn’t been passed by the House of Representatives, [Sen. Franken) today urged Senate leadership to include the bipartisan, Senate-passed Farm Bill in any deal brokered to address the nation's fiscal challenges.”

And in a conference call with reporters on Thursday, Sen. Mike Johanns (R., Neb.) noted that, “The reason why I think there's some possibility that this still has a chance of being resolved and get -- get a Farm Bill either passed or to the conference committee is because there will be under the House version or the Senate version somewhere between $23 and $30 billion worth of savings. At a time where everybody is trying to look for ways to save money here to deal with this budget crisis that's not an insignificant amount. Don't get me wrong. I'm not trying to suggest to anybody that that solves our budget dilemma, not even close.

“But, it is -- it is a significant amount of savings. And so, if they can get the bill done they can get those savings.”

The Arkansas Democrat Gazette reported on Thursday that, “U.S. Rep. Rick Crawford said Wednesday that he expects the House and Senate to extend the current federal farm bill before the end of the year rather than try to iron out differences in versions passed earlier this year.

“‘I think we're going to see an extension in the lame-duck session,’ Crawford, R-Ark., said during a videoconference at the 78th annual Arkansas Farm Bureau conference.”

The Democrat Gazette added that, “Crawford said that any extension would continue the direct payments to farmers allowed under the current farm bill - but likely with some kind of reduction, possibly around 5 percent, to reflect budget concerns.”

Andrew Bottrell reported on Friday at The North Platte Telegraph (Neb.) Online that, “Rep. Adrian Smith [R., Neb.] wouldn’t predict whether or not a long-term Farm Bill would be passed during the lame duck session of Congress in December on Thursday, but said he hoped it would happen, even with Congress facing the so-called ‘fiscal cliff’ on Jan. 1.

“‘I’ve been engaging with my colleagues to find out what it would take to get their vote [for a Farm Bill],’ he told reporters on a conference call Thursday. ‘We’re working through that and wanting to address that. I want to get this done sooner rather than later.’”

Meanwhile, an Inside U.S. Trade article on Friday noted that, “One key player in this ongoing debate on both the fiscal cliff and the farm bill is Sen. Max Baucus (D-MT), who sits on both the Finance Committee and the Agriculture Committee in the Senate. Baucus sees a fiscal cliff package as one possible option to pass a five-year farm bill, but is not pushing that approach at the moment, sources said.

“‘When we think about how the farm bill might fit into the bigger picture of priorities Congress has to address, we can’t forget that the Senate bill cuts spending by $23 billion. We worked with farmers and ranchers to find smart, practical ways to cut costs and still support agriculture jobs — so when it comes to tackling the debt, we have to remember that the farm bill can be part of the solution,’ Baucus said in a statement sent to Inside U.S. Trade this week.”

An interesting and detailed update at the National Sustainable Agriculture Coalition (NSAC) Blog provided a comprehensive look at Farm Bill related issues as the calendar turns and Congress heads “into the final three-week December marathon.”

This helpful and information NSAC update is available here: “Farm Bill and Agriculture Appropriations Options Heading Into December.”

And, Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “Congress returns to work next week under the same circumstances it has faced for the last few weeks — no sign of a deal on the fiscal cliff, and no real sense that either party will back down on taxes (Republicans) or spending (Democrats).

“In addition, both the House and Senate plan to continue working on legislation unrelated to the fiscal cliff, which will likely look increasingly surreal given the urgency of the situation.

“The House appears to have so little left in the way of actual legislating at this point in the year that House Republicans decided to cut the week short.”

The House floor schedule this week, released by Majority Leader Cantor, is available here.

 

Budget Issues- Democrat Senators Express Caution on Estate Tax Increase

Zachary A. Goldfarb reported in today’s Washington Post that, “As the White House and Republican leaders enter the final month of negotiations to avoid a year-end ‘fiscal cliff,’ both sides struck an uncompromising tone Sunday, as warnings mounted that they will be unable to forge an agreement to stop an automatic series of deep spending cuts and large tax hikes that could push the economy into recession.

“Following private meetings last week, the senior negotiators for the White House and the Republicans took to the airwaves Sunday to accuse the other side of intransigence and to demand that the opposition concede on the central question of how much to raise taxes on the wealthy.

“‘Right now, I would say we’re nowhere, period. We’re nowhere,’ House Speaker John A. Boehner (R-Ohio) said on ‘Fox News Sunday.’  Boehner added that the Republicans have offered a way to break the stalemate — by compromising on an overhaul of the tax code that would limit deductions that disproportionately benefit the rich.”

The Post article added that, “But Treasury Secretary Timothy F. Geithner rejected that proposal Sunday, insisting that the wealthy pay higher tax rates and that Republicans come forward with a plan that meets that requirement. ‘There’s no path to an agreement that does not involve Republicans acknowledging that rates have to go up on the wealthiest Americans,’ he said on NBC’s ‘Meet the Press.’

“While it had always seemed likely that the two sides would reach a stalemate before finally coming to agreement — as has been the pattern over the past two years — lawmakers and congressional aides tracking the back-and-forth said there’s a growing probability that no deal will be reached in time to avoid the fiscal cliff.

“‘I think we’re going over the cliff,’ Sen. Lindsey O. Graham (R-S.C.) said on CBS’s ‘Face the Nation.’”

Damian Paletta and Patrick O’Connor reported in today’s Wall Street Journal that, “Congressional aides for both parties say current back-channel talks are just as unproductive as those taking place in front of the TV cameras.

Policy makers are aiming to secure a two-step deal by year-end. The first would lock in an initial round of spending cuts and potentially make changes to the tax code that would take effect in January. The second would require policy makers to pursue an overhaul of the tax code and entitlement programs, with the White House setting August as its target date for the negotiations to end.”

Meanwhile, on “Meet the Press” yesterday, when pressed for specifics on proposed spending cuts by David Gregory, Sec. Geithner highlighted farm spending.  Here is the exchange:  “GREGORY: But where are you specifying spending cuts as part of this deal that you presented in Capitol Hill?

“MR. GEITHNER: Again, detailed comprehensive reforms that add up to 600 billion dollars. I’ll– I’ll give you couple of examples. We are proposing to reform farm subsidies where we think we can save a lot of money. It makes a lot of sense. In healthcare, we’re proposing to modestly increase premiums for high income beneficiaries of Medicare. It makes a lot of sense. We’re proposing to get the government much smarter of how they buy medicine for people who are under Medicare. Those are just three examples, but there’s 600 billion dollars of examples in the president’s proposals. Now again, if the Republicans don’t like those ideas and they want to do it differently, they want to go beyond that, then they have to tell us what makes sense to them. And then we can take a look at it. But what we can’t do is try to figure out what makes sense for them.”

Later in yesterday’s program, Sen. Claire McCaskill (D., Mo.) noted that: “Well, I think you’re going to- I think you can see more cuts– frankly a lot of us have voted for more cuts in the farm programs. You know, 23 billion dollars in savings in the Farm Bill that’s languishing in the house right now, 23 billion a year in deficit savings and actually cutting money out of that program. There are other programs like that– we can do away with some of the job training programs. There is duplication there.”

Sec. Geithner made the same point regarding on farm spending on CNN’s “State of the Union” program yesterday, noting that, “We proposed to reform and limit farm subsidies, which can save a significant amount of money.”  (related audio clip available here (MP3- 0:44)).

In addition, Siobhan Hughes reported in Saturday’s Wall Street Journal that, “Sen. Mary Landrieu and President Barack Obama can link arms on many pieces of the White House’s proposed budget package, including raising taxes on higher-income Americans and spending more on infrastructure.

But Ms. Landrieu, along with a notable handful of Democratic colleagues, parts ways with the White House on one increasingly thorny issue: the president’s call to raise the estate tax as part of Washington’s bid to strike a deficit-cutting deal before year’s end.”

The Journal article added that, “‘This particular tax is inherently unfair,’ Ms. Landrieu said, adding that she would oppose any year-end deficit-reduction package that raises the estate tax. ‘That’s a make-or-break for me.’

“The Louisiana senator was joined by Democratic Sens. Max Baucus of Montana, who heads the Senate Finance Committee, and Mark Pryor of Arkansas, who said this week they would prefer not to raise the estate tax. They wouldn’t say how an increase would affect their support for a broader agreement as the parties scramble to head off a package of hefty spending cuts and new taxes known as the fiscal cliff.”

 

Agricultural Economy

On Friday, USDA’s National Agricultural Statistics Service released its monthly Agricultural Prices report, which stated in part that: “The corn price, at $6.71 per bushel, is down 6 cents from last month but 88 cents above November 2011 [related graph]…The soybean price, at $13.80 per bushel, decreased 40 cents from October but is $2.10 above November 2011 [related graph]…and…The November price for all wheat, at $8.42 per bushel, is up 4 cents from October and $1.12 above November 2011 [related graph] .”

Bloomberg writer Brian Wingfield reported on Friday that, “Barge traffic on the Mississippi River will be stalled even if the U.S. Army Corps of Engineers decides next week to release more water from a major tributary, according to shippers who are already reducing loads on the drought-shrunken waterway…Water levels on the Mississippi are approaching record lows as the dry season combines with the worst drought in 50 years, creating a choke point off southern Illinois. That’s where submerged rock formations called pinnacles stud the riverbed, preventing cargo-laden barges from passing if the water gets too low.

Under pressure from Midwestern lawmakers, Jo-Ellen Darcy, the Army’s assistant secretary for civil works, yesterday agreed to expedite an analysis of increasing the flow from the Missouri River, which joins the Mississippi near St. Louis. Senators led by Richard Durbin of Illinois, the chamber’s second-ranking Democrat, summoned Darcy, a former Senate aide, to the Capitol to press for swift action.”

A news release Friday from Sen. Chuck Grassley stated that, “A bipartisan group of U.S. senators representing states along the Missouri and Mississippi rivers is elevating a request for the Army Corps of Engineers to manage water levels on the Missouri River to avoid a catastrophic economic problem on the Mississippi River…To avoid a potentially months-long loss of navigation on the Mississippi, senators today urged President Barack Obama to issue an emergency directive to permit additional water flows from Missouri River reservoirs to maintain navigation on the Mississippi.  They also asked for Federal Acquisition Rules to be waived to allow the Corps to expedite blasting of the rock pinnacles near Grant Tower and Thebes, Illinois.”

On the other hand, Tom Lawrence reported on Saturday at The Daily Republic (Mitchell, S.D.) Online that, “South Dakota’s congressional delegation is taking a united stand in an ongoing water fight.

“Sen. Tim Johnson, a Democrat, and Sen. John Thune and Rep. Kristi Noem, both Republicans, all signed a letter to President Barack Obama urging him to deny recent requests to aid Mississippi River navigation by declaring a state of economic emergency and authorizing the Corps of Engineers to release water from the Missouri River’s dams and reservoirs.

“The letter also was signed by senators and representatives from North Dakota, Kansas and Montana. Gov. Dennis Daugaard has also joined in asking Obama not to release more water.”

Keith Good

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