FarmPolicy

December 19, 2014

Fiscal Cliff and the Farm Bill

Categories: Budget /Farm Bill

Lisa Mascaro and Kathleen Hennessey reported last night at the Los Angeles Times Online that, “The House voted Tuesday to roll back income tax increases on the vast majority of Americans, finalizing a deal on the so-called fiscal cliff after weeks of gridlock.”

The article explained that, “The final tally, 257 to 167, included support from 172 of the chamber’s Democrats and just 85 of the majority Republicans, far fewer than half. The vote divided House GOP leaders, with the second- and third-ranking Republicans, Eric Cantor of Virginia and Kevin McCarthy of Bakersfield, among the 151 in their party voting no. Speaker John A. Boehner (R-Ohio), casting a rare vote, and Rep. Paul D. Ryan (R-Wis.), the House Budget Committee chairman and 2012 vice presidential nominee, voted in favor.

“Once signed by President Obama, the bill will allow taxes to rise for those with incomes above $400,000 for individuals and $450,000 for couples. It also will renew tax credits aimed at low-income households and college students, extend unemployment benefits, delay automatic spending cuts in defense and other government programs for two months, and resolve several other issues that Congress had left hanging.

What it will not do is match the ambitious goals set by Obama and Boehner for a ‘grand bargain’ that would put the government on a path to a balanced budget. Instead, the compromise sets up another deadline two months hence for Congress to once again deal with the government’s budget.”

The LA Times article noted that, “The deal, largely negotiated by Vice President Joe Biden and Senate Republican leader Mitch McConnell (R-Ky.), blocked income tax increases that were to go into effect at the turn of the year for 99% of American households. It passed the Senate by a lopsided 89-8 vote, engineered by McConnell and Senate Majority Leader Harry Reid (D-Nev.) to put as much pressure as possible on the House to follow suit.”

Janet Hook, Corey Boles, and Siobhan Hughes reported in today’s Wall Street Journal that, “The compromise dodges one cliff, but it sends Congress barreling toward another. In two months, the delayed $110 billion in spending cuts will again kick in. At the same time, the U.S. will face the need to increase its borrowing limit, a change that can only be made by Congress. That sets up another rancorous fight, one with potentially more damaging consequences. Republicans want to use the debt ceiling to extract spending cuts. Mr. Obama has said he won’t negotiate.”

Ryan Tracy reported in today’s Wall Street Journal that, “The fiscal-cliff deal approved in the Senate included a $12 billion extension of a wind-power tax credit and other support for renewable energy, sparking opposition from House Republicans who said it was an example of the kind of government spending they wanted to cut.

“The opposition ultimately wasn’t enough to topple the bill, which the House approved late Tuesday without changes. But the debate was a reminder of the differences between President Barack Obama, who has described clean energy as a top priority of his second term, and many Republicans.”

And, Lori Montgomery and Rosalind S. Helderman reported in today’s Washington Post that, “In addition to avoiding much of the fiscal cliff, the measure will extend federal dairy policies through September, averting a threatened doubling of milk prices.”

More specifically on the Farm Bill, David Rogers reported yesterday at Politico that, “The giant New Year’s tax package rushed through Congress Tuesday includes a nine-month farm bill extension that forestalls any immediate spike in milk prices but also represents a bitter blow for farmers who had hoped for long-sought changes in the dairy support program.

“In the final hours, Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) found herself pushed aside in favor of legislative language generated by the office of Minority Leader Mitch McConnell (R-Ky.), a bit player and frequent ‘no’ vote when the Senate adopted a more comprehensive five-year farm bill last June.”

Mr. Rogers added that, “McConnell’s role in the tax talks gave him immense leverage, while Stabenow was hurt by committee infighting over her efforts to write a more comprehensive farm bill extension that included changes in the dairy program.

The upshot is a victory for Southern agricultural interests with the greatest stake in a costly system of direct cash payments to often already profitable producers. In the dairy arena, giant processors like Dean Foods Co. come out ahead while the outcome is a major blow for the National Milk Producers Federation, which watched with disbelief from the sidelines on New Year’s Eve.

“‘The deal is blatantly anti-reform,’ said Ferd Hoefner, policy direct for the Sustainable Agriculture Coalition. ‘Many smaller, targeted programs to fund farm and food system reform and rural jobs…were left out completely.’”

The Politico article noted that, “Minnesota Rep. Collin Peterson, the top Democrat on the House Agriculture Committee, had warned the White House that it must tread carefully on the dairy and farm bills issues or risk a backlash. And Peterson didn’t hide his anger with the administration for helping to roll Stabenow and the Ag Committees.

“‘Upset is an understatement,’ Peterson told POLITICO. ‘I’m not going to talk with those guys. I’m done with them for the next four years. They are on their own…‘This is crazy,’ Peterson said of the tax package itself. ‘The farm bill is one thing but there’s just no way I’m going to add $4 trillion to the deficit. …We’re not doing anything. We’re making it worse.’

Beyond dairy, the outcome is a wake-up call to the entire farm lobby of its weakened political standing in Washington and need to avoid so much infighting.”

In addition, yesterday’s article added that, “The anger sowed among dairy farmers was evident in a strong statement released Tuesday morning by Jerry Kosak, president of the milk producers federation.

“‘The Senate’s vote earlier today on a nine-month extension of current farm policy is a devastating blow to the nation’s dairy farmers,’ Kozak said.  ‘After months of inaction, the plan that passed overnight as part of the fiscal cliff package amounts to shoving farmers over the dairy cliff without providing any safety net below.’”

Reuters writers Charles Abbott and Roberta Rampton reported today that, “A deal approved by the U.S. Congress late on Tuesday to avoid the automatic tax hikes and spending cuts known as the ‘fiscal cliff’ also includes measures to avert the ‘dairy cliff’ – a steep increase in milk prices.

The tax agreement contains a nine-month fix for expiring farm subsidy programs by extending a 2008 farm law. That gives lawmakers time to come up with a new five-year replacement.”

The article indicated that, “The extension of the 2008 farm law is designed to buy time for Congress to complete a new farm bill and still allow for another round of direct payments.

But three dozen programs in the law have no money left, including disaster relief and biofuel development as well as a soil conservation program and some rural economic development and agricultural research programs.”

Bill Tomson reported in today’s Wall Street Journal that, “The fiscal-cliff bill that cleared Congress Tuesday includes a measure to avert the ‘dairy cliff,’ a sharp rise in consumer prices for milk that could have been triggered by the expiration of the 2008 farm bill.

“A nine-month extension of the farm bill was added to the fiscal-cliff package before it passed the Senate in the early hours Tuesday; the House cleared the bill Tuesday night.”

In a tweet yesterday, Sen. Patrick Leahy (D., Vt.) indicated that, “I insisted on adding feed cost adjuster formula to #dairy cliff fix in the MILC pgm. We won, and Senate passed it this morning @nmpf #VT”

In a separate tweet yesterday, Sen. Leahy noted that, “Without adding feed cost adjuster, MILC would have been an empty promise to farmers who need the help. @nmpf #VT”

Meanwhile, with respect to the budget legislation, Ron Hays reported yesterday at the Oklahoma Farm Report Online that, “The Chairman of the House Ag Committee, Frank Lucas, Third District Congressman from Oklahoma, voted in favor of the measure- he was one of 85 Republicans that joined 173 Democrats to pass the measure. Lucas told Farm Director Ron Hays right after the vote that ‘I voted in favor of lowering taxes, I voted in favor of extending the 2008 Farm Bill for an additional year.’ He called the extension of the 2008 farm law through the end of September very good news for the farm community. ‘In the environment we are working in- it is absolutely a miracle that we got it done.’”

To listen to the full conversation between Ron Hays and Chairman Lucas from last night, just click here.

Rep. Tim Walz (D., Minn.) tweeted yesterday that, “Disappointed in farm bill extension – rural America deserves 5 year farm bill, not 9 month extension.”

After voting against the budget legislation yesterday, Rep. Rick Crawford (R., Ark.) noted in a statement, that, “With respect to farm policy, Congress cannot expect farm families to continue producing the safest, most abundant and affordable food supply on the planet without the certainty provided under a long-term Farm Bill. The House Agriculture Committee passed a fiscally sound, bipartisan five-year Farm Bill in June that would provide producers with the ability to plan well into the future. The short-term policy extension included in the fiscal cliff deal would hurt producers in Arkansas and around the country.”

Rep. Tom Latham (R., Iowa) also voted against the budget measure and noted in part yesterday that, “The White House-Senate compromise contains some good provisions I agree with, such as preventing massive tax hikes on most families and finally making the cuts permanent, extending the farm bill, and maintaining the wind energy tax credit. However, it lacks a critical component: necessary spending cuts to address our exploding debt. Our $3.5 trillion budget is and will continue to be our primary fiscal obstacle, and a bill that increases taxes and fails to even begin to address spending decisions is not the action American taxpayers have asked for.”

National Council of Farmer Cooperatives (NCFC) President Chuck Conner released a statement yesterday on the Farm Bill Extension, which noted that: “The [NCFC] appreciates Congress’s action today to avert tax increases for 98% of American taxpayers. Farmer co-ops employ hundreds of thousands of Americans across the country and this action will provide certainty as they seek to grow their operations to take advantage of the opportunities provided in a dynamic global marketplace.

At the same time, it is truly unfortunate that Congress could not come together this year to enact a new, five-year farm bill that would have included substantial reform and significant budget savings. The one-year extension of the farm bill contained in the legislation, while continuing funding for many important programs such as the Market Access Program, is deeply flawed.

Most notably, the extension fails to include the market-based reform provisions of the Dairy Security Act, thereby leaving our nation’s dairy farmers operating without a safety net at a time of high volatility in feed prices.”

The statement added that, “Further, changes to procedures for agricultural disaster assistance increase the likelihood that producers, when faced with a natural disaster beyond their control, will not receive help in a timely manner. One need only look at the events of the last two years—from the floods of 2011 to the historic drought of 2012—to see how foolhardy this is.

“We look forward to working with members of the incoming 113th Congress as they begin the process of writing a new farm bill this year to correct these deficiencies and ensure that producers have access to the tools they need to help feed and clothe a growing world population.”

And a release yesterday from the National Farmers Union (NFU) noted in part that, “[NFU] President Roger Johnson issued the following statement after the U.S. House of Representatives passed HR 8, the Tax Relief Extension Act, commonly referred to as the ‘fiscal cliff’ bill, which included a farm bill extension:

“‘Once again, Congress has left rural America out in the cold. An extension represents a short sighted, temporary fix that ultimately provides inadequate solutions that will leave our farmers and ranchers crippled by uncertainty.

The legislation that passed fails to provide disaster aid for farmers or necessary support for our dairy industry, yet continues unjustifiable direct payments. The bill also does not provide mandatory funding for the energy title, specialty crops and organic provisions, and new important programs for beginning farmers and ranchers.”

Note also that a Congressional Budget Office (CBO) update regarding the fiscal cliff budget measure (“H.R. 8, American Taxpayer Relief Act of 2012”) was posted yesterday at the CBO Online.

In other news, John Eligon reported in yesterday’s New York Times that, “The pheasant, once king of Iowa’s nearly half-a-billion-dollar hunting industry, is vanishing from the state. Surveys show that the population in 2012 was the second lowest on record, 81 percent below the average over the past four decades.

“The loss, pheasant hunters say, is both economic and cultural. It stems from several years of excessively damp weather and animal predators. But the factor inciting the most emotion is the loss of wildlife habitat as landowners increasingly chop down their brushy fields to plant crops to take advantage of rising commodity prices and farmland values.”

The article noted that, “Bruce Rohwer, the president of the Iowa Corn Growers Association, said he believed that farmers were as concerned as ever about being good stewards of the land and allowing natural habitats to bloom where they would prevent soil erosion and water contamination. But farmers also have to contend with economic realities, he said.

“‘As much as some people have romantic ideas that farming is just something that happens,’ he said, ‘it is the way in which we make a living, so you have to consider all factors.’”

And Arian Campo-Flores reported in today’s Wall Street Journal that, “Driving recently through his family’s citrus groves in rural LaBelle, Fla., Mark Wheeler saw scores of oranges littering the ground. It was an ominous sign the trees could be ailing just as the citrus harvest gets under way in Florida.

The likely culprit was an incurable disease known as citrus greening that is ravaging the state’s orange and grapefruit trees. Researchers estimate more than half of Florida’s citrus groves are infected with the bacterial disease, which slowly kills trees as it causes them to shed fruit.”

Keith Good

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