A willingness to cut farm program spending seems pervasive. The subject will probably come up every time the renewal of some costly government program comes up for debate. For example, Congress is currently trying to craft legislation to extend the payroll tax credit and unemployment benefits that expire at the end of the year.
Both republicans and democrats want the legislation to pass, but the dispute is over how to pay for it. And members from both parties in both the House and the Senate are kicking around ways to do so via reduced farm program payments.
This isn’t the most likely scenario, but it is a threat that keeps surfacing. Congress is under a Dec. 16 deadline for legislation to keep the government running. Congress has passed appropriations bills for a few departments, including agriculture, but the rest of the government is still operating under a continuing resolution. The most likely outcome is an omnibus spending bill that will fund government operations well into 2012. However, with the deep divisions in Congress, even passing this essential legislation may be difficult.
There is disagreement on the Senate Agriculture Committee about how to proceed on developing the 2012 farm bill. Chairman Debbie Stabenow wants to build on the proposal she developed with House Agriculture Committee Chairman Frank Lucas (R-OK), but Senate ranking member Pat Roberts (R-KS) said that plan should be scrapped and lawmakers should start over with an open process. Committee members would like to complete work on the new farm bill by May, but such a tight deadline is unlikely to be met and the current farm bill officially expires at the end of September 2012.
A bill to prevent EPA from regulating “farm dust” passed the House of Representatives last week. The Environmental Protection Agency (EPA) has repeatedly said they would not impose regulations on farm dust, but members of the House want to pass a bill to prevent them from doing it, just in case they should try. However, the Senate is not expected to bring the bill up for a vote, at least not anytime soon.
“Earmarks” would be permanently banned under legislation introduced by several Senators. Earmarks are the add-ons to bills that direct spending to a member’s district or pet project, frequently derided as “pork barrel spending.” Senator John McCain (R-AZ) is urging the administration to accomplish the same end by issuing an executive order that would publicize any lawmaker’s efforts to divert funding to their pet projects. Earmarks add several billion dollars each year to government spending and debt.
Legislation that would clarify Congress’ intent regarding the new permitting requirements for pesticide applications under the Clean Water Act is urgently needed according to a letter signed by several Senators and circulated among Senate leaders. EPA recently implemented rules requiring National Pollutant Discharge Elimination System permits for pesticide applications over water. Many people are concerned that the new rules will prevent or delay needed pesticide application treatments.
Ethanol producers say the end of the blenders’ tax credit will have little impact on the industry. Jeff Broin, founder and CEO of S. Dakota-based POET, the largest ethanol maker in the world, says in the short term the end of the credit will mean a 4-cent-per-gallon increase in the cost of gasoline to consumers. Since 2008, ethanol has averaged 16 cents cheaper than gasoline on a per gallon basis, even without the tax credit factored in. However, ethanol use is up against the “blend wall” and there are still plenty of regulatory and legal hurdles for getting E-15 into the marketplace.
The end of the import tariff on ethanol is not expected to have any impact in the near term since the U.S. is currently exporting ethanol to Brazil. However, incentives for the cellulosic ethanol industry are still needed.