Washington Report for 11-30-12

By Steve Kopperud

Fiscal Cliff Round One: Rejection, Posturing

Treasury Secretary Tim Geithner went to Capitol Hill late this week to lay out the White House plan for avoiding the fiscal cliff, a scheme seeking budget balance by making the nation’s top income earners pay significantly more to the U.S. Treasury. What he got from Republican leaders was rejection of the President’s plan as “all the favorite proposals with no sign of compromise whatsoever” and a simple rehashing of failed White House budget recommendations from the last four years, according to reports. However, the Republican side of the budget battle has yet to propose any specific plan of its own. Senior Democrat Senators said the GOP should not be surprised by the President’s proposals, and that if the GOP doesn’t like the plan, it should offer up details of its own pathway to savings and deficit reduction. House Speaker John Boehner (R-OH) was angry that a private phone conversation with President Obama this week was leaked to the press, and he publicly questioned the President’s commitment to a fiscal cliff deal as Obama flies around the country trying to build public support for increasing taxes on the nation’s top taxpayers. Senate Minority Leader Mitch McConnell (R-KY) said the Geithner meeting was “a token gesture, a meeting to be able to say there was a meeting.” The President’s plan to cut $4 trillion from the deficit over the next decade is built on $1.6 trillion in new tax revenues generated by increasing tax rates on the top 2 percent of U.S. wage earners – those more than $250,000 a year – along with increases in capital gains and dividend income taxes, $600 billion in new taxes and a return to 2009 estate tax rates, this last item opposed by Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee. The plan, the White House said, would raise $584 billion by capping tax deductions at 28 percent, and limiting itemized deductions for top earners. The plan also includes new authority to the White House to raise the nation’s debt limit without congressional approval – which apparently drew chuckles from Senate GOP leaders – while  postponing Budget Control Act automatic spending cuts for a year, new 2013 spending of $50 billion on infrastructure, cutting $400 billion from health care spending, extending yet again the Alternative Minimum Tax “patch,” extending some business tax breaks while broadening unemployment compensation, and a possible extension of the current payroll tax deduction. There were no proposals on reducing or re-invention of entitlement programs demanded by the GOP, including changes to Medicare, Medicaid and Social Security. Senate Democrats said the President’s proposal to allow him to raise the federal debt limit could be blocked by Congress, but the President could veto that action, forcing Congress to try and override the veto with a two-thirds vote.

New Farm Bill or Extension? 

While House Republican leaders continue to say “extension” of the Farm Bill (in whole or in part) is a must-do item for the lame duck session, budget hawks like the $35 billion in savings achieved by the House Agriculture Committee’s five-year bill, whether that action is a new omnibus farm program package or an extension of the 2008 Farm Bill is still unknown. House and Senate agriculture committee leaders had lunch this week with Secretary of Agriculture Tom Vilsack to discuss “prospects for a new Farm Bill,” and Vilsack’s press secretary said the luncheon shouldn’t be viewed as a “new development.” President Obama has publicly called for a comprehensive five-year Farm Bill, which was re-iterated this week in a White House press briefing. There was no joint statement following the lunch, although each member said the goal continues to be a five-year bill. Reports indicate Senate ag leaders are showing some flexibility in modifying their bill’s commodity title to provide the kind of direct price support southern producers demand, and which the House committee-passed bill contains. Some argue extending the current Farm Bill is actually more difficult than approving a five-year bill, but House Agriculture Committee Chairman Frank Lucas (R-OK) this week told reporters “you can’t approve a five-year bill by January 1 and have USDA ready to go.” Lucas continued to state that without extension or a new bill, so-called “permanent law” kicks in, at least in part, which would lead to $38 per hundredweight payments on milk – a retail price of $7 a gallon, say some – and a return to acreage allotments and other arcane programs going back to the late 1940s. If extension is the way forward, Lucas has talked to Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI), but has not sat down with his own ranking member, Rep. Collin Peterson (D-MN), who is a voluble critic of extending the 2008 Farm Bill. Lucas said he and Peterson share the same goal of a new bill, but added “I have to work in the environment I’m in,” saying an extension of 2008 programs means Congress would have to modify the simple extension to build in a “transition” period and “safety net” between the extension action and a new bill.  

Most Key Ag, FDA Committee Chairs in 113^th Congress Remain the Same

Sen. Debbie Stabenow (D-MI) and Rep. Frank Lucas (R-OK) will remain chairs of their respective chambers’ agriculture committees based on leadership announcements so far, and while the House Democrats have yet to formally name their ranking committee members, Rep. Collin Peterson (D-MN) will very likely remain as ranking member of the House Agriculture Panel. Senate Majority Leader Harry Reid (D-NV) has named a few new committee chairs, but the GOP has not finalized ranking members. Sen. Pat Roberts (R-KS), the current ranking member of the Senate Ag Committee, may be challenged for that spot by Sen. Thad Cochran (R-MS), former chairman of the committee and the longest serving Senator on the Ag Panel. If Cochran takes the ranking slot on the ag committee, chances of getting a five-year Farm Bill completed by January 1 become more difficult given southern producers’ unhappiness with the Senate-approved Farm Bill. In the House, the Republican caucus selected sitting chairman Rep. Fred Upton (R-MI) to remain as head of the Energy & Commerce Committee, the panel overseeing all things related to the Food and Drug Administration, and Rep. Henry Waxman (D-CA) is expected to remain the committee’s ranking member. The House Appropriations Committee remains under the gavel of Rep. Hal Rogers (R-KY), but a battle royal is being waged by Rep. Marcy Kaptur (D-OH) and Rep. Nita Lowey (D-NY) over who will take the ranking member spot. Rep. Jack Kingston (R-GA) will remain chairman of the agriculture/FDA subcommittee. Former chairman of the House Agriculture Committee Rep. Bob Goodlatte (R-VA) was selected to chair the Judiciary Committee. The Senate Health, Education, Labor & Pensions (HELP) Committee remains under the chairmanship of Sen. Tom Harkin (D-IA), but Sen. Mike Enzi must surrender the ranking slot and it’s unclear whether Sen. Lamar Alexander (R-TN) or Sen. Richard Burr (R-NC) will move into that slot. The Senate Appropriations Committee will be chaired by Sen. Daniel Inouye (D-HI), but the ranking member slot is open based on Cochran’s tenure. The agriculture/FDA subcommittee chair is open given Sen. Herb Kohl’s (D-WI) retirement, but Sen. Roy Blunt (R-MO) will likely remain as ranking member.

Mississippi River Levels Spur Call for Action

With water levels in the Mississippi River at near historic lows and weather forecasts saying levels will not rise dramatically soon, lawmakers in Washington, D.C., have stepped in to try to find a way to keep stalled barge traffic moving. At risk, they say, is the movement of $7 billion in agricultural products, including grains, oilseeds, fertilizers and chemicals, as well as coal and petroleum. The Fertilizer Institute says more than half of spring fertilizer moves upriver and moving it by other means, including rail, is limited. Complicating the drought-reduced river levels is annual action by the U.S. Army Corps of Engineers to reduce Missouri River water flow into the Mississippi as part of a federal plan to maintain irrigation systems and the water requirements of the Missouri Basin. That reduction began November 11. While shippers have called on the Corps to stop limiting Missouri River flow into the Mississippi, the Corps says it’s mandated by law and can’t arbitrarily cease its flow reduction program. The Waterways Alliance in Washington, D.C., says the Corps has the authority to halt its program; it simply chooses not to do it. Also in question is a project the Corps is set to begin under which it will blast rock formations along the Mississippi River to allow barge traffic to move despite the low water levels. However, that project isn’t set to begin until February. Sen. Tom Harkin (D-IA) called on President Obama to declare an emergency situation to increase the Missouri River water flow to the Mississippi and accelerate other river navigation projects, including the rock blasting. Key river state Senators and House members were set to meet with the Corps this week to discuss both the Missouri flow controversy as well as expediting the blasting program. Previously 15 Senators and 62 House members wrote to the Corps to tell them to begin the blasting project as soon as possible. 

GOP Embraces Immigration Reform

Two lame duck Republican Senators this week introduced legislation on immigration reform, their response to the unsuccessful DREAM Act, and a signal the GOP is hearing the message on federal immigration reform in a big way. The immigration reform group America’s Voice says the November general election saw 10 new House members who support immigration reform elected, while four new Senators support revising U.S. immigration laws. Sens. John Kyl (R-AZ) and Kay Bailey Hutchison (R-TX), both retiring after the lame duck session, introduced the ACHIEVE Act, a bill that would apply to the children of illegal immigrants under the age of 28 brought to the U.S. illegally when they were under the age of 14. The Senators said they introduced their bill to “get the ball rolling” on the immigration reform debate, and consulted with Sens. John McCain (R-AZ), a major reform advocate, as well as with Sen. Marco Rubio (R-FL) who’s expected to introduce his own reform measure in the 113^th Congress. Both Senators stressed their bill does not guarantee amnesty or a pathway to citizenship for the children of illegal immigrants, but provides for a way in which citizenship can be “earned.” Their bill calls for three new visa options. One visa with a six-year life, would be for eligible children pursuing an advanced or technical degree or serving four years in the military. The second four-year visa would be for those who’ve already earned a degree or have previously served in the military, and the third would be a “permanent” four-year renewable visa. All seeking full citizenship would still have to apply for a green card.

Chain Restaurants Say Repeal the RFS; Ethanol Says Study Flawed

A new study released this week by the National Council of Chain Restaurants says the federal ethanol Renewable Fuel Standard is the major culprit in ingredient cost increases to the nation’s fast food companies and must be repealed. The renewable fuel industry said the NCCR study is flawed, and one group said, “oil prices, not corn prices, dictate food prices,” with Growth Energy President Tom Buis calling the study a “classic example of blame the little guy.” Joined by newly selected House Judiciary Committee Chairman Bob Goodlatte (R-VA), author of legislation in the current Congress to either kill the ethanol RFS or link it to the U.S. Department of Agriculture corn stocks-to-use ratio, NCCR released a study done by PriceWaterhouseCoopers, which estimates that the ethanol RFS costs chain restaurants up to $3.2 billion a year in increased costs, with “quick service” restaurants paying an extra $2.5 billion, and full-service restaurants seeing cost jumps of $691 million.  

USDA Revises Crop Insurance Rates; Shifts Formula

Following its 2012 recalculation of federal crop insurance premium rates for corn and soybeans – which resulted in less premium income – the U.S. Department of Agriculture said this week that it will continue to modify federal crop insurance rates based on a revised formula, the result of an independent study and peer review process. This will result in 2013 calculations on grain sorghum, spring wheat, rice and cotton that will increase in some states and drop in others based on a premium calculation that USDA’s Risk Management Agency says gives more weight to recent years, rather than having to equally weight all years back to 1975. The new plan also integrates weather data into the premium rating process so that losses from “rare weather events” don’t skew the premium calculations. USDA currently insures 264 million acres based on 114 million policies.