December 9, 2019

Weekend Report: Farm Bill and Budget Issues

Categories: Budget /Farm Bill

Farm Bill Issues

David Rogers reported yesterday at Politico that, “With President Barack Obama showing new interest, House and Senate Agriculture committees are drafting a short-term farm bill extension to avert a spike in milk prices next month but also permit another round of direct cash payments to already profitable growers — a costly subsidy that lawmakers had vowed to end this year.

“Without some action, an outdated 1949 farm law will kick back in on Jan. 1 requiring the Agriculture Department to buy up dairy products at a rate of $38.54 per hundredweight, or more than double the current prevailing price. Secretary Tom Vilsack risks being sued however he chooses to implement the policy, but consumers could see a real impact at the grocery store in a matter of weeks.

That potential milk crisis has caught the attention of the president, who is coming off the sidelines after largely ignoring the farm debate all year.”

Mr. Rogers explained that, “Minnesota Rep. Collin Peterson, the ranking Democrat on the House Agriculture panel and a prominent leader on dairy issues, said he was called by Minority Leader Nancy Pelosi Friday after Obama reached out to her seeking action. Talks had already been underway on the extension, but the president’s intervention led to a flurry of exchanges among the committee leaders Friday.

“Senate Agriculture Chairwoman Debbie Stabenow (D-Mich.) told POLITICO the goal is to have a ‘responsible short-term extension’ of no more than nine months. And her hope still is to enact a five-year plan early enough in 2013 that the cash subsidies could be reduced or eliminated before payment is due in October.”

“House Agriculture Chairman Frank Lucas (R-Okla.) has already said he will reconvene his committee to begin marking up a new bill in late February. Stabenow told POLITICO that her intention is to move in February as well,” the Politico article said.

In addition, yesterday’s article noted that, “In the case of dairy, the draft bill would also incorporate changes proposed in the Dairy Security Act — a major priority for most dairy producers and Peterson but one strongly opposed by many processors as well as Speaker John Boehner (R-Ohio)…[B]ut this sets up a ticklish situation in the House, especially given early signals that the leadership may try to move the bill Monday under suspension, which would require a two-thirds majority.”

Note that NBC News Capitol Hill Correspondent Kelly O’Donnell tweeted yesterday that, “NBC News has learned a short FARM bill extension to be discussed in WH fiscal cliff mtg. Could keep milk prices from spiking to $8 gal”

Reuters writer Charles Abbott reported yesterday that, “The U.S. House and Senate agriculture committees are working on a short-term extension to the expired U.S. farm bill, and plan to vote on the extension by Monday, the final day of 2012, lawmakers and aides said.

“The proposed extension to farm legislation that expired in September could be for six months to a year.”

The Reuters article noted that, “‘We’ll find a way’ to get an extension passed, said Minnesota Senator Amy Klobuchar, a member of the Senate Agriculture Committee, who added that the senators’ preference was still to pass a complete bill.

“‘This is so much ‘Plan B’ that it’s like ‘Plan M’ for milk,’ Klobuchar said.”

And, Ron Nixon reported yesterday at The New York Times Online that, “Congressional aides say the extension could be for a year, giving farmers, who have been battered by the worst drought in 50 years, a reprieve after lawmakers were unable to come up with a new farm bill.”

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Congress is pivoting to a one-year extension of the existing farm bill instead of trying to push through a new five-year bill.

“Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.), who previously had opposed a one-year extension, told reporters Friday that she was shifting gears and preparing a one-year bill.”

The Hill update added that, “‘That’s the only way you can do it, extend all of them,’ she said.

“Stabenow’s shift comes amid growing worries about a ‘milk cliff.’”

Yesterday’s update noted that, “Rural lawmakers have hoped that the farm bill could ride on a ‘fiscal cliff’ agreement before Jan. 1. Once 2013 arrives, work on the farm bill must start from scratch. Some lawmakers are worried that new crop insurance programs created in the House and Senate versions of the 2012 farm bill could be scrapped next year under increasing budget pressure.”

Dan Voorhis reported yesterday at The Wichita Eagle Online that, “U.S. Sen. Pat Roberts, R-Kan., ranking Republican on the Senate’s agriculture committee, said consumers and farmers shouldn’t face this uncertainty.

“‘I am committed to working with Senate and House leadership to convince them of the need to, at the very least, pass an extension of the current farm bill and prevent uncertainty in the dairy case and on the farm,’ he wrote in an e-mail this week.”

Bill Tomson and Ian Berry reported last night at The Wall Street Journal Online that, “Even if the 1949 pricing formula does take effect, it wouldn’t be until late January when prices would start to climb because the industry has already priced most milk for January delivery, said John Wilson, senior vice president of Dairy Farmers of America, the largest dairy cooperative, representing 15,000 farmers. Cheese prices could conceivably start climbing sooner because cheese has a longer shelf life and producers could withhold supplies on a bet that they could get better prices later.

“Lawmakers and federal officials say Congress could still approve legislation blocking the 1949 law, or they could pass a temporary extension to the 2008 farm bill. ‘We are exploring all options to prevent the 1949 farm bill from taking effect, especially as it relates to dairy policy,’ House Agriculture Committee Chairman Frank Lucas (R., Okla.) said.”

A brief video update yesterday by The Washington Post explained the potential ramifications of the “dairy cliff,” while John Carney reported yesterday at CNBC Online that, “The futures market does not seem to be all that worried about the possibility of milk prices doubling.”

Meanwhile, Kevin Robillard reported yesterday at Politico that, “[Appearing yesterday] on CNN’s ‘Starting Point,’ Sen. Debbie Stabenow (D-Mich.) lamented the inability to reach a deal on both the cliff and a farm bill. Failure to pass a farm bill will result in what has been dubbed ‘the dairy cliff,’ where milk prices could double for consumers. Stabenow blamed both issues on House Republicans.

“‘I believe in the Senate that we do [understand the impact of the fiscal cliff],’ Stabenow said. ‘We are having a lot of very important, very good, positive good conversations between Democrats and Republicans. … The tough part is in the House, where they have taken the very extreme position about protecting the wealthiest Americans at all costs, even holding middle-class families to do it. That really isn’t rhetoric, that’s what we’re seeing over and over again.’”

Note that Chairwoman Stabenow’s CNN interview yesterday can be viewed here, while her remarks on the Farm Bill can be heard here (MP3- 0:45).

In other developments, Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “The Senate passed the emergency-spending bill for Hurricane Sandy relief efforts on Friday night.

“The 62-32 vote came after the Senate worked all day Friday on amendments to H.R. 1, a vehicle to provide $60.4 billion to storm recovery efforts.”

Yesterday’s update pointed out that, “Earlier Friday, Sen. Jeff Merkley (D-Ore.) proposed an amendment that would have reauthorized fire and drought emergency funding for farmers and ranchers. But Sen. Jeff Sessions (R-Ala.) raised a budget point of order against that proposal, and the Senate failed to waive it in a 55-40 vote. That vote meant that Merkley’s proposed language would not have been considered emergency spending; as a result, he pulled his amendment.”

To listen to the Senate floor debate yesterday on Sen. Merkley’s amendment, just click here (MP3- 5:25), while more background on the withdrawn amendment can be found here.


Budget Developments

Lisa Mascaro and Kathleen Hennessey reported last night at the Los Angeles Times that, “The prospects for avoiding a New Year’s Day tax increase on nearly all American wage earners improved substantially Friday after congressional leaders met at the White House and declared they would work toward a bill to avoid part of the so-called fiscal cliff.

“After an hourlong afternoon session with the leaders of the House and Senate, President Obama told reporters he was ‘modestly optimistic’ that a deal could be reached before the Monday deadline [full remarks here].

“The tone at the White House and on Capitol Hill marked an abrupt shift from the steadily worsening relations of the past several weeks.”

The LA Times article explained that, “The change could be seen on the Senate floor, as Majority Leader Harry Reid of Nevada and Republican leader Mitch McConnell of Kentucky said they would work together to come up with a compromise to present to their party caucuses on Sunday afternoon. If that works, the Senate would prepare to vote on Monday, Reid said.”

More specifically, the article noted that, “The package would not address spending on Social Security or Medicare, which Republicans have sought to restrict, nor would it raise the government’s debt ceiling, which would have to be dealt with again by early spring. It probably would not delay the across-the-board cuts in defense spending and domestic programs that are scheduled to begin in the new year, although Congress could act to defer them.”

On estate tax issues, the LA Times indicated that, “Another point of contention has been the level for estate taxes. Republicans want to keep the current 35% tax rate on estates worth more than $5 million. Many Democrats want a 45% rate on estates worth more than $3.5 million. If Congress does not act, the tax automatically reverts to its 1990s level of 55% on estates worth more than $1 million.

“‘There are certain things in which you begin losing a lot of real votes quickly, including mine — and fussing with the estate tax is one of them,’ said retiring Sen. Jon Kyl of Arizona, the second-ranking Senate Republican.”

Janet Hook and Carol E. Lee reported in today’s Wall Street Journal that, “It remains uncertain whether a bipartisan agreement can be reached. If there is a Reid-McConnell deal, officials said, it would probably include these elements: an extension of current income-tax rates for most Americans; a measure to block a scheduled expansion of the alternative minimum tax; an extension of unemployment benefits and possibly a measure to prevent a scheduled cut in Medicare payments to doctors.

A wide range of other issues are on the table that could serve as sweeteners or stumbling blocks, potentially including elements of a stalled farm bill. Mr. Obama wants to include an extension of the U.S.’s borrowing limit, which will be breached in the spring, but that is unlikely, officials said.”

Likely to be included is a measure blocking a Jan. 1 increase in the estate tax, an issue that divides Democrats and is make-or-break for senators of both parties,” the Journal article said.

Jonathan Weisman and Jennifer Steinhauer reported in today’s New York Times that, “After weeks of fruitless negotiations between the president and Speaker John A. Boehner, Mr. Obama turned to Senator Harry Reid, the majority leader, and Senator Mitch McConnell of Kentucky, the Republican leader — two men who have been fighting for dominance of the Senate for years — to find a solution. The speaker, once seen as the linchpin for any agreement, essentially ceded final control to the Senate and said the House would act on whatever the Senate could produce.”

Bipartisan agreement still hinged on the Senate leaders finding an income level above which taxes will rise on Jan. 1, most likely higher than Mr. Obama’s level of $250,000. Quiet negotiations between Senate and White House officials were already drifting up toward around $400,000 before Friday’s White House meeting. The two sides were also apart on where to set taxes on inherited estates,” the Times article noted.

Today’s article added that, “In an effort to keep the pressure on, Mr. Obama, for the second time in his presidency, has agreed to appear on NBC’s ‘Meet the Press’ on Sunday, giving him a forum to push for a deal and to provide his view of the state of the negotiations.

Hoping to stave off the expiration of dozens of farm programs and the carrying out of a 1949 farm law that could double the price of milk, Senate and House leaders were also working on legislation to extend the current farm bill.”

Lori Montgomery and Paul Kane reported yesterday at The Washington Post Online that, “The two sides also had yet to agree on another politically sensitive issue: how to tax inherited estates. Republicans — and many Senate Democrats from states with large family farms — want to maintain the current tax structure, which exempts estates worth up to $5 million and taxes those above that level at 35 percent. Obama has proposed a $3.5 million exemption and a tax rate of 45 percent, a proposal that is far more acceptable to liberal Democrats.”

Keith Good

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