D.C. Watch: Super committee to tackle budget deficits

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Congress has been on a month-long break throughout August but will return to work this week. This fall, most attention will be focused on the work of the Joint Select Committee on Deficit Reduction, commonly referred to as the “super committee”.

These twelve (6 Democrats/6 Republicans) are assigned the task of reducing the size of federal budget deficits by $1.5 trillion over the next 10 years. Republicans on the Committee met for the first time this week and the full committee must meet before Sept. 16. House and Senate Agriculture Committees will provide  their recommendations for cuts to the super committee by Oct. 14.

The super committee must agree on deficit reduction measures by Nov. 23 or automatic across the board cuts will be implemented. Agriculture programs are sure to be affected; with direct payments almost certain to be recommended for elimination. The Senate Agriculture Committee held a field hearing in Wichita, Kan. last week. The common theme by witnesses at the hearing was that Congress needs to
retain and strengthen the crop insurance provisions when it drafts the 2012 Farm Bill.

Crop insurance has been vital to farmers across the country this year, but especially in the drought plagued area stretching from Kansas down through Oklahoma and Texas. In recent farm bills farmers have had to comply with conservation requirements to be eligible for direct payments. With reduction or elimination of direct payments likely in the 2012 Farm Bill, some farm groups are suggesting that conservation compliance should be required for farmers that want to sign up for crop insurance.

USDA updated the forecast for 2011 farm income last week. The new forecast shows net cash farm income at a record $114.8 billion, up 24 percent from the 2010 level of $92.3 billion. The key factor is a $33.6 billion increase in crop cash receipts as a result of the strong crop prices. Livestock cash receipts are also up by $22.4 billion, but feed costs are projected to be up $9.2 billion and the cost of feeder livestock rises by $2.4 billion. Overall cash expenses increase by more than $30 billion, up 12.5 percent from 2010. With the high crop prices, government payments drop by a little more than $2 billion.

The record high farm income levels make farm program payments a big target for Congress in their efforts to cut federal budget deficits.

Even with the super committee working in the background Congressional committees will be working to develop appropriations bills to fund the various government departments in fiscal 2012. In theory Congress needs to pass 12 appropriations bills before the new fiscal year begins on Oct.1, however, that deadline is seldom met and so far the Senate has not passed even one of the funding bills. If the bills aren’t passed, Congress must pass continuing resolutions to keep the government running once the current fiscal year ends.

Agriculture Secretary Tom Vilsack says the cellulosic ethanol industry will reach a “tipping point” of commercial viability by 2013. (Because of the slower-than-expected progress in the development of the technology, the Environmental Protection Agency had to sharply reduce the renewable fuels mandate for cellulosic ethanol for 2012 by 98% or more, from the 500 million gallons stipulated in the law, to between 3.45 million and 12.9 million gallons. Despite this, Vilsack predicts that by 2013 “you are going to see commercial-sized cellulosic ethanol facilities become operational”. But he adds it is important to keep the renewable fuels standard mandates in place, especially if the blender tax credit and import tariff expire at the end of this year as expected.

The U.S. Department of Labor is proposing to ban children under the age of 18 from working around grain elevators. According to Purdue University, 26 people died in grain-elevator accidents in 2010 with six of those people under the age of 16. Proposed rules could prevent farmers from hiring children under 16 to drive equipment or work in tobacco fields. The rules would not apply to children working for their parents.



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