Budget: A Bungee-Jump Over the Cliff? — Hurricane Sandy Measure
Jonathan Weisman and Jennifer Steinhauer reported in today’s New York Times that, “With just five days left to make a deal, President Obama and members of the Senate were set to return to Washington on Thursday with no clear path out of their fiscal morass even as the Treasury Department warned that the government will soon be unable to pay its bills unless Congress acts.
“Treasury Secretary Timothy F. Geithner, adding to the building tension over how to handle a year-end pileup of threatened tax increases and spending cuts, formally notified Congress on Wednesday that the government would hit its statutory borrowing limit on Monday, raising anew the threat of a federal default as the two parties remained in a standoff.
“Mr. Geithner wrote that he would take ‘extraordinary measures’ to keep the government afloat but said that with so much uncertainty over the shape of the tax code and future government spending he did not know how long the Treasury could shuffle accounts before the government could no longer pay its creditors.”
The Times article noted that, “Yet with days left before the fiscal punch lands, both sides are exhibiting little sense of urgency, and new public statements Wednesday appeared to be designed more to ensure the other side is blamed rather than to foster progress toward a deal.
“After a high-level telephone conference call, House Republican leaders called on the Senate to act but opened the door to bringing to the House floor any last-minute legislation the Senate could produce.
“‘The House will take this action on whatever the Senate can pass, but the Senate first must act,’ said the statement issued on behalf of Speaker John A. Boehner and his three top lieutenants.”
Jake Sherman reported yesterday at Politico that, “Late Wednesday, Senate Democrats fired back, saying House Republicans should pass a bill that would extend tax rates for income below $250,000.”
Today’s New York Times article added that, “The shift to the Senate has focused new attention on Senator Mitch McConnell of Kentucky, the Republican leader and a deal-making veteran. Democrats say they need assurances from Mr. McConnell that he will not use procedural tactics to delay any potential bill for an interim solution to avert the fiscal crisis.
“But Don Stewart, a spokesman for Mr. McConnell, said no one from the White House or from Mr. Reid’s office has reached out to begin negotiations. Democrats say that Mr. McConnell knows full well what they are proposing: the same Senate bill that passed in July extending all the expiring Bush-era income tax cuts on incomes below $250,000, setting the tax rate on dividends and capital gains at 20 percent, and stopping the alternative minimum tax from rising to hit more middle class taxpayers. Onto that, Democrats would like to add an extension of expiring unemployment benefits and a delay in across-the-board spending cuts while negotiations on a broader deficit reduction plan slips into next year.
“Democrats now suggest that Republicans are content to wait until after the January deadline. On Jan. 3, Mr. Boehner is likely to be re-elected speaker for the 113th Congress. After that roll call, he may feel less pressure from his right flank against a deal.”
Lisa Mascaro reported last night at the Los Angeles Times Online that, “Resolving the dispute, said a senior administration official, ‘is up to two people: the Senate minority leader to not block a vote and the House speaker to allow a vote.’”
With respect to missing the fiscal cliff deadline, Nelson D. Schwartz reported in yesterday’s New York Times that, “Michelle Meyer, senior United States economist at Bank of America Merrill Lynch, said there is a 40 percent chance of what she calls a ‘bungee-jump over the fiscal cliff,’ with Congress failing to act until after Jan. 1 but eventually averting the full package of tax increases and spending cuts by mid-January. If that were to happen, she predicts a steep sell-off on Wall Street, which would quickly force political leaders to compromise.”
Lori Montgomery and Paul Kane reported in today’s Washington Post that, “‘The blame game could reach full swing by the weekend,’ the Washington Research Group, an arm of Guggenheim Partners, wrote Wednesday in its daily message to investors. ‘We . . . continue to believe there is a 70 percent chance that we go over some form of the cliff at the end of the year.’”
Meanwhile, Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “Senate leaders agreed to hold votes on amendments to the Senate emergency-spending bill for Hurricane Sandy relief.
“The Senate could resume work after lawmakers return from Christmas on Thursday on H.R. 1, a vehicle to provide $60.4 billion to Hurricane Sandy recovery efforts, but some conservatives have said the bill has unnecessary spending measures, during a time when lawmakers are trying to make spending cuts.
“Senate Majority Leader Harry Reid (D-Nev.) announced there would be 21 amendment votes, 13 of which are from Republicans.”
Daniel Newhauser noted yesterday at Roll Call Online that, “[House] Leadership has pledged to give members 48 hours notice before calling them back to Washington, D.C., from their districts. Since leadership has not yet issued the notice, the House is not likely to reconvene until at least the weekend. Aside from the fiscal cliff, the House still has other unfinished business, such as the farm bill and a supplemental spending bill related to Superstorm Sandy, unless they decide to pass them by unanimous consent or recess and take measures up in the 113th Congress.”
The stalled Farm Bill was highlighted on the CBS Evening News on Christmas Day.
The segment included remarks from two producers, one noted: “What do we do? You know, they don’t know what to do. It’s so uncertain right now that the banks don’t know what to do. The farmers don’t know what to do.”
While another farmer stated, “So we’re sitting right here in limbo, waiting on our lame-duck Congress to see if actually they will take up and reauthorize the new farm bill.”
Lindsey Boerma reported yesterday at CBS News Online that, “The ‘dairy cliff’ is just the most immediate of what would be gradual price increases on foods across grocery stores if Congress doesn’t pass a farm bill to replace the one that expired nearly three months ago. Technically, farm regulations since the end of September have been operating under a 1949 ‘permanent’ law. Because the 2008 law covered all crops planted in 2012, though, and federal funding for many agricultural programs is assured through March 2013, lawmakers have enjoyed a bit of a grace period until Jan. 1, when products like milk could skyrocket to prices based on dairy farm production costs 64 years ago.
“But just days before the end of the year, farmers and their bankers – left in the lurch with decisions about next year’s crops – are still waiting and hoping for a holiday miracle in Washington. Agriculture Secretary Tom Vilsack might advise they don’t hold their breath: After weeks of aggressively campaigning to get the House and Senate Agriculture Committees in a room to hash out the makings of a new five-year plan, Vilsack this week conceded that the passage of a bill by Jan. 1 was unlikely.”
Yesterday’s update added that, “Still, the chance for any form of farm legislation to be included in rush negotiations to avoid tumbling into a recession at the start of the year, as Vilsack said, has faded, along with the likelihood of a big-picture ‘fiscal cliff’ deal at all.”
Meanwhile, Rhiannon Pabich reported yesterday at the SeaCoast Online (New Hampshire, Southern Maine) that, “Late last week, [Rep. Chellie Pingree’s (D, Maine)] office announced her appointment to the powerful House Appropriations Committee, which controls the annual budgets of federal departments and agencies. Pingree is only the second Mainer since 1899 to serve on the panel.
“Under House rules, the Appropriations Committee is considered an ‘exclusive’ committee: Its members don’t serve on other committees. But Pingree said she plans to petition the House Democratic leadership to remain on the Armed Services and Agriculture panels. She said she has ‘really enjoyed’ her work on the Agriculture Committee.”
And Sabrina Tavernise reported in yesterday’s New York Times that, “A new national study has found modest declines in obesity among 2- to 4-year-olds from poor families, a dip that researchers say may indicate that the obesity epidemic has passed its peak among this group.
“The study, by researchers from the Centers for Disease Control and Prevention, drew on the height and weight measurements of 27 million children who were part of the federal Women, Infants and Children program, which provides food subsidies to low-income mothers and their children up to the age of 5.
“The study was based on data from 30 states and the District of Columbia and covered the years from 1998 to 2010. The share of children who were obese declined to 14.9 percent in 2010, down from 15.2 percent in 2003, after rising between 1998 and 2003. Extreme obesity also declined, dropping to 2.07 percent in 2010 from 2.22 percent in 2003. The study was published Tuesday in The Journal of the American Medical Association.”
Renewable Energy Issues- Wind Tax Credit, Biofuels
The Wall Street Journal editorial board opined yesterday that, “Whenever the fiscal cliff talks resume, one of the issues on the table will be what to do with expiring tax breaks. One opportunity that Republicans shouldn’t squander is the chance to end the taxpayer handout for wind power.
“After 20 years of public subsidy, the wind industry is set at the end of the year to lose its production tax credit, which gives developers a writeoff of 2.2 cents for every kilowatt hour they produce. Senate Democrats have responded with draft legislation that would extend and expand the credit for another year, adding more than $12 billion to the deficit.”
And former Senator Phil Gramm, also writing yesterday on the Journal editorial page, indicated that, “Federal subsidies for new wind-power generation will end on Dec. 31 unless they are renewed by Congress. For the sake of our economy and the smooth operation of the energy market, Congress should let the subsidies lapse. They waste taxpayer money, subvert the allocation of capital, and generate a social cost many times the price tag of the subsides themselves.”
On the other hand, the Los Angeles Times editorial board noted yesterday that, “We too would like to see wind farms compete on their own without assistance, but the industry is still too underdeveloped for that. The ideal solution would be for Congress, when it considers tax reforms next year, to end the practice of annual renewals for the wind-power tax credit, instead approving a long-term assistance program that phases out the subsidy over time. That would provide certainty for the industry while prodding it to become more cost-efficient. Meanwhile, the lame-duck Congress must renew the subsidy before it, and its powerful public benefits, are gone with the wind.”
Meanwhile, Dan Piller reported yesterday at The Des Moines Register Online that, “Iowa’s 41 ethanol plants produced 3.7 billion gallons during 2012, matching 2011 production. But 2012 was the first year since 2002 where production did not increase year to year.”
Owen Fletcher reported in today’s Wall Street Journal that, “U.S. ethanol producers are finding creative ways to earn more money as demand for their flagship product stagnates. These companies are using corn not only to make ethanol but also ingredients for products ranging from baked goods and nutrition bars to industrial coatings to fish food.”
And, Matthew L. Wald provided an interesting look at the renewable fuel standard and advanced biofuels earlier this week at The Green Blog (New York Times), noting in part that, “In coming days, the Environmental Protection Agency’s to-do list will include setting a standard for the amount of advanced biofuels that refiners will be required to blend into gasoline and diesel supplies in 2013. The question is tricky because production in one category, cellulosic fuel from nonfood sources like corn cobs, stalks, wood chips and garbage, has not met the target set by Congress. The E.P.A. has the authority to adjust the quotas as needed, but the issue is complicated.”
In other energy news, Anna Fifield reported yesterday at The Financial Times Online that, “One of President Barack Obama’s fiercest critics, the head of the US’s powerful oil and gas industry lobby, has signalled the potential for better collaboration during Mr Obama’s second term, thanks in no small part to the unexpected fossil fuel boom that has put the country on track to become the world’s largest energy producer.”
And Zack Colman reported yesterday at The Hill’s Energy Blog that, “A new report shows U.S. energy consumption dropping, even as the industry experiences a boost in production.”
Dar Danielson reported yesterday at Radio Iowa Online that, “The annual farmland survey released earlier this month by Iowa State University showed a record average cost of land at $8,296 an acre. ISU economist, Mike Duffy, who conducts the survey, says most of the purchases are by those who want to expand.
“He says the buyers are typically neighbors or those in the neighborhood, as the vast majority of those buying land are inside Iowa. Duffy says farmers see the high return in corn and soybeans as a reason for investing in more land.”
In other news, Meghan Grebner reported yesterday at Brownfield that, “HSUS President and CEO Wayne Pacelle has dropped his bid to run for a seat on Tyson Food’s board.”