D.C. Watch: Debt ceiling increase vs. spending cuts

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Policymakers in Washington are digging in for the next big battle, this one over raising the country’s debt ceiling. The Secretary of the Treasury says the U.S. government will be unable to pay its bills if the debt ceiling isn’t raised by early March at the latest.

Many Republicans in Congress say they won’t vote to raise the debt ceiling unless the increase is matched with spending cuts. But the Obama Administration says it won’t even negotiate spending cuts as part of the debt ceiling debate, arguing that spending cuts should be part of the debate over the sequester, that also needs to happen in the next few weeks. At least based on recent public statements, a government shutdown is possible if a compromise can’t be reached. There can be little doubt that the polarization of policymakers will be back in full view over the coming weeks.

Extension of the 2008 farm bill was approved as part of the bill avoiding the “fiscal cliff” just a couple of weeks ago. But already there are efforts in Congress to take the money destined for direct payments to farmers and use it elsewhere. For example, one offered in the House this week would have scuttled direct payments to help pay for the aid approved for areas affected by Hurricane Sandy.

With other battles over government spending ahead, the $5 billion in direct payments is a big target with near record net farm income and soaring land values and net worth. There is certainly a chance that the payments scheduled for October under the “extension” of the 2008 farm bill may not be delivered.

It is official that Agriculture Secretary Vilsack will stay on in his post, at least for awhile. In a speech to the American Farm Bureau Federation, Vilsack pointed out some of the accomplishments over the past four years; including four years of record ag exports, achieving the lowest ever fraud rate for the SNAP (food stamp) program, the expansion of broadband in rural areas, and resolving civil rights actions that had been plaguing the Agriculture Department for years.

Secretary Vilsack called on Congress to pass a 5-year farm bill and complained that the recent extension of the 2008 farm bill had nothing for specialty crop producers and livestock producers hurt by the 2012 drought.

The U.S. Court of Appeals for the District of Columbia has denied a petition for a rehearing of a case contending that EPA did not have the authority to grant a partial waiver of the Clean Air Act, allowing for the sale of E-15 for cars built after 2000. This upholds the decision of a three-judge panel in August that the industries filing the suit could not show that they had suffered specific harm as a result of EPA’s action. Ethanol proponents hailed the decision.

USDA has announced a new “microloan” program designed to help small operations, beginning farmers or socially-disadvantaged farmers secure loans under $35,000. The aim is to help producers through their start-up years. Agriculture Secretary Vilsack said the new microloans represent USDA’s continuing efforts to help beginning farmers and ranchers. The final rule establishing the program was published in this week’s Federal Register.

Last year’s drought could end up costing taxpayers nearly $16 billion in crop insurance costs. The government subsidizes crop insurance premiums and, at least this past year, covered some of the insurance companies’ payouts. Some in Washington want to reduce spending on crop insurance. But it is clear that the effects of the 2012 drought would have been far worse if the coverage had not been available.

The Senate Agriculture Committee will begin work on a five-year farm bill by March according to Sen. Debbie Stabenow, D-Mich., and the Senate is expected to pass a bill similar to the one it approved in 2012. However, there is growing pessimism that a new farm bill will be put in place this year. There is already talk in the House of Representatives of passing yet another extension of the 2008 farm bill



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