Janet Hook and Carol E. Lee reported in today’s Wall Street Journal that, “Congress and the White House took small steps toward breaking the budget impasse Thursday, but Democrats and Republicans grew increasingly fearful they won’t be able to avert the tax increases and spending cuts known as the fiscal cliff, a prospect that is unnerving consumers and investors.
“President Barack Obama invited congressional leaders to the White House on Friday afternoon for a last-ditch effort to broker a deal, as the Senate returned to Washington on Thursday. House GOP leaders said in a Thursday conference call with Republicans, who are growing nervous about their party being blamed for the deadlock, that the House will reconvene Sunday evening.
“It is still possible the two sides can reach a deal, especially with the leaders meeting Friday. Any resolution would be a scaled-back version of the package Mr. Obama and congressional leaders had anticipated passing after the November election. The White House is pressing for the Senate to extend current tax rates for income up to $250,000, extend unemployment benefits, keep the alternative minimum tax from hitting millions of additional taxpayers and delay spending cuts set to take effect in January.”
The Journal writes noted that, “At best, leaders are looking at a narrow bill that could be passed at the last minute. At the meeting Friday, Mr. Obama will outline the elements he thinks should be in a deal and could get majority support in both chambers of Congress, according to a person familiar with the matter. He won’t put forward a specific bill or legislative language, the person added.”
Jonathan Weisman reported in today’s New York Times that, “Lawmakers and aides from both parties cautioned that the burst of activity could be more about making sure the other side gets the blame than any real search for a resolution before the Jan. 1 deadline. Under Senate rules, no deal could run the gantlet of procedural hurdles in time for a final vote before the deadline without all the senators agreeing not to slow progress.”
Lori Montgomery and Rosalind S. Helderman reported in today’s Washington Post that, “The scope of the package under discussion appeared to follow the contours Obama laid out Friday in a news conference where he urged Congress to extend expiring tax cuts for 98 percent of taxpayers and to keep benefits flowing to about 2 million long-term unemployed. In addition, aides said, talks were focused on preserving low tax rates for inherited estates and extending tax breaks for college tuition and the working poor adopted as part of Obama’s 2009 economic stimulus package.
“But aides said that time had probably run out for an agreement on significant spending cuts or to lift the legal limit on government borrowing, which will have to be done within the next two months.”
Meanwhile, Tom Lutey reported earlier this week at the Billings Gazette (Mont.) Online that, “Farmers and ranchers have lobbied hard against the estate tax this year, but are resigned to massive increases as the so-called ‘fiscal cliff’ nears.
“‘I talked to Max (Baucus) on the 10th and he thought they’d get it fixed, but it doesn’t look like it to me. Harry Reid doesn’t want it, and he’s the head of the Senate,’ said Bob Hanson, a White Sulphur Springs rancher and Montana Farm Bureau Federation president.
“A big issue for Montanans in agriculture, the estate tax has been a sleeper subject in the debate over the fiscal cliff — the $7 trillion in tax increases and government cuts expected to kick in Jan. 1 if Congress and the president fail to reach a deal by week’s end.”
The article explained that, “The estate tax used to be a tax to which farmers and ranchers didn’t pay much attention, but Montana farmland values more than doubled between 2002 and 2007. As a result, many farms that never had the value to trigger the estate tax now do.”
An update yesterday at KNBN-TV (Rapid City, S.D.) Online reported that, “In just a matter of days, the death tax will nearly double the first of the year as an often overshadowed portion of that dreaded fiscal cliff. And for ranchers and farmers in South Dakota it will make it even harder to keep the family farm in the family.”
In other developments, Matthew L. Wald reported in today’s New York Times that, “All over the country, developers are in a sprint to get new wind farms up and running before Tuesday, when the federal wind production tax credit will disappear like Cinderella’s ball gown. After that, the nation’s wind-farm building will be at a virtual standstill.
“The stakes of meeting the deadline are enormous. Wind turbines that are connected to the grid and in commercial service before midnight on New Year’s Eve are entitled to a 2.2 cent tax credit for each kilowatt-hour they generate in their first 10 years, which comes out to about $1 million for a big turbine. As it stands now, those that enter service on Jan. 1 or later are out of luck.”
On the House Floor yesterday, Democrat Whip Steny Hoyer (Md.) urged the GOP Leadership to call the House back into session to address the fiscal cliff issue, as well as other important legislation, including the Farm Bill (audio clip– MP3- 0:32).
And in a news conference yesterday, Rep. Hoyer (D., Md.) stated that: “The Senate tomorrow will consider the Sandy supplemental legislation. I talked to Senator Reid this morning. Hopefully they will pass that either tomorrow or by Saturday. Certainly the House of Representatives needs to address that supplemental to give relief to those that were savaged by Sandy in the worst storm that’s hit the Northeast perhaps in history.
“The Violence Against Women Act passed the Senate overwhelmingly. That’s something that we could be working on today. The farm bill expires on December 31st. Milk prices will spike very substantially if that bill is left to expire. [Majority Leader Eric Cantor (Va.)], in his statements on the floor, indicated that that would be addressed before we left here for the end of the 112th Congress. That is some six days away, four days until December 31st, obviously.”
Later, Rep. Hoyer added that, “On two separate occasions this month, Majority Leader Cantor acknowledged the necessity of, as I say, completing the farm bill. I would hope that we could come back here and reach compromise, which has been so difficult to do.”
Meanwhile, Jia Lynn Yang reported in today’s Washington Post that, “Distracted by dealing with the Bush tax cuts, lawmakers are running out of time to pass the latest version of the country’s sweeping farm bill and avoid what’s become known as the ‘dairy cliff.’ If Congress misses the Jan. 1 deadline, the price of milk could rise significantly — some say by more than $3 a gallon — as the country’s farm policy reverts back to laws dating from 1949.”
The Post article added that, “The Senate has already passed a farm bill. The House Agriculture Committee approved a version earlier this year, but the House leadership has not allowed the bill to be debated by the entire House. And there are no signs the bill will surface ahead of the year-end deadline.
“The office of Speaker John A. Boehner (R-Ohio) referred questions about the House schedule to majority leader Eric Cantor (R-Va.), whose office did not respond to a request for comment.”
Tom Gara reported yesterday at the Corporate Intelligence Blog (Wall Street Journal) that, “With the milk industry already in crisis, the dairy cliff is more bad news for an industry that Americans have been slowly turning away from for decades.”
A news release yesterday from the International Dairy Foods Association (IDFA) indicated that, “The [IDFA] sent a letter to Secretary of Agriculture Tom Vilsack today urging him to avoid or delay the impact of a 1949 law that could drastically raise milk prices. The letter outlined legal options available to the government to avoid this ‘dairy cliff,’ which could impact the pocketbooks of millions of consumers and taxpayers.
“In the letter, IDFA described the authority the Secretary has to avoid affecting milk markets, which would give Congress additional time to finish a new farm bill in the new year. The 2008 Farm Bill expires on December 31, requiring the U.S. Department of Agriculture to revert to outdated, underlying laws that don’t reflect current market conditions or international trade in dairy products. Because the USDA does not have regulations on the books to implement the old law, the agency will need to develop new ones using a process that could take several weeks or months.”
And last night on Special Report with Brett Baier (Fox News Channel), syndicated columnist Charles Krauthammer commented on the “dairy cliff” and the Farm Bill, and sourly noted that: “I do think if we went over the milk cliff it would actually be a good idea. People actually saw the milk price double. It would be less abstract than watching a debt clock. They would finally understand we have these insane laws that acquire barnacles over the decades, and the farm laws are the worst. They are all kind of pressure, special interest favors, payoffs that make no economic sense. I want to wipe them out and start over.”
In other news, the “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “The National Grain and Feed Association (NGFA) has spearheaded a pair of letters to the leaders of the congressional agriculture committees urging that they build upon the Conservation Reserve Program (CRP) provisions adopted by the House Agriculture Committee when resuming consideration of a new five-year farm bill.
“The letters — one signed by eight national agribusiness trade associations and the other by 20 state and regional grain and feed associations affiliated with the NGFA — commended both the Senate and House Agriculture Committees for including important reforms to the CRP in their respective versions of the 2012 farm bill.
“But the groups signaled a preference for the House Agriculture Committee’s version of the CRP language because it would reduce more expeditiously the current 32-million-acre maximum cap to 25 million acres, as well as require that the U.S. Department of Agriculture offer producers and landowners a one-time opportunity to release, without penalty, CRP acres that can be farmed in an environmentally sustainable way before contract expiration. The House language would require that acres be enrolled in the CRP for at least five years before being eligible for release penalty-free prior to contract expiration.”
The AP reported yesterday that, “The Mississippi River level is dropping again and barge industry trade groups warned Thursday that river commerce could essentially come to a halt as early as next week in an area south of St. Louis.
“Mike Petersen of the Army Corps of Engineers said ice on the northern Mississippi River is reducing the flow more than expected at the middle part of the river that is already at a low-water point unseen in decades, the result of months of drought.
“The river level is now expected to get to 3 feet at the Thebes, Ill., gauge on Jan. 6, a juncture that could force new limitations. Worse still, the long-range forecast from the National Weather Service calls for the river to keep falling, reaching 2 feet on Jan. 23.”
The article added that, “Contractors hired by the corps have been using excavators on barges to remove the rock pinnacles near Thebes, and performed the first series of explosions on the pinnacles Friday. Further decisions on when to blast will be made on a day-to-day basis, Petersen said.”
Dan Piller reported yesterday at The Des Moines Register Online that, “The pre-Christmas rain, snow and ice storm that struck Iowa last week improved the state’s drought situation slightly, although 90 percent of the state still remains under ‘severe’ or ‘extreme’ drought according to the latest U.S. Drought Monitor.”
Yesterday’s update added that, “While Iowa faces the rest of the winter partially locked in severe or extreme drought status, much of its fellow Corn Belt states of Ohio, Indiana and Illinois have received substantial relief due to heavier fall precipitation.”
In other news, Brad Plumer and Michael A. Fletcher reported in today’s Washington Post that, “Thousands of dockworkers from Baltimore to Houston are threatening to go on strike Sunday over their pay, a move that could throttle an array of key ports and disrupt commerce at a critical juncture for the economy.”
An update yesterday by University of Illinois Agricultural Economist Darrel Good at the farmdoc daily Blog (“Crop and Livestock Price Prospects for 2013”) noted in part that, “The crop price environment will likely remain very volatile in 2013, reflecting production uncertainty and unsettled economic issues. However, a transition to lower prices is anticipated as production rebounds. The extent of the price decline will depend heavily on the outcome of the 2013 crops.
“The small corn crop and high prices in 2012 will result in a substantial decline in consumption and small inventories by the end of the current marketing year. Smaller crops in other parts of the world and continued strong demand will also reduce foreign inventories. Argentine corn production is expected to rebound in 2013. Stable U.S. acreage and a return to a trend yield would result in a U.S. crop in 2013 in excess of 14 billion bushels, allowing a substantial rebuilding of inventories. Prices are expected to decline from the record high levels of 2012 as production rebounds. An average farm price above $7 is expected for the 2012-13 marketing year, but the average for the 2013-14 marketing year could be in the $4.75 to $5.50 range.
“Both South America and the U.S. had small soybean crops in 2012, resulting in sharply higher prices in the last half of the year. Like corn, U.S. and world production is expected to rebound in 2013. The USDA has projected a record South American harvest. Stable acreage and a trend yield in the U.S. would result in a crop near the record of 2009. If production unfolds as expected, world inventories will expand during the 2013-14 marketing year and prices will continue to retreat. An average farm price near $14.50 is expected for the 2012-13 marketing year, while the average for the 2013-14 marketing year is expected to be in the $11 to $12 range.”
Environmental Protection Agency- Administrator Jackson Resigns
John M. Broder reported in today’s New York Times that, “Lisa P. Jackson is stepping down as administrator of the Environmental Protection Agency after a four-year tenure that began with high hopes of sweeping action to address climate change and other environmental ills but ended with a series of rear-guard actions to defend the agency against challenges from industry, Republicans in Congress and, at times, the Obama White House.
“Ms. Jackson, 50, told President Obama shortly after his re-election in November that she wanted to leave the administration early next year. She informed the E.P.A. staff of her decision on Thursday morning and issued a brief statement saying that she was confident ‘the ship is sailing in the right direction.’”
The Wall Street Journal editorial board noted today that, “Over her four years, Ms. Jackson inflicted an unprecedented surge of new rules on private business, including the most expensive ever in the history of government by several orders of magnitude. A ‘major’ regulation used to be defined as imposing costs of $100 million or more. The EPA now routinely issues multibillion-dollar rules with little more than a press release.”
Ben Geman reported yesterday at The Hill’s Energy Blog that, “The looming departure of Environmental Protection Agency Administrator Lisa Jackson is yielding quick speculation about who will replace her, and might touch off a brutal Senate confirmation fight to lead a department that has faced constant GOP criticism…[T]he White House said that Robert Perciasepe, the agency’s deputy administrator, will take the top job in an acting capacity if nobody has been confirmed when she departs, which appears likely.”
Also, an article titled, “Who Will Succeed Jackson as EPA Head?” was posted yesterday at National Journal Online.