Wednesday, January 02, 2013

Farm Bill Is Extended In 'Fiscal Cliff' Deal, Setting The Stage For More Agriculture Battles In 2013

The 'dairy cliff' is avoided, and crop subsidies will continue; the details of the deal and document downloads for the massive legislation...

By Jerry Hagstrom and Eddie Gehman Kohan

After days of high drama on Capitol Hill, the House late on Tuesday night approved the Senate version of the American Taxpayer Relief Act on a vote of 257-167. Just before departing for Hawaii, President Obama addressed the nation from the White House, and hailed the massive compromise package that saves America from the worst effects of the fiscal cliff--tax increases and spending cuts--as a win for the middle class, because "more than 98 percent of Americans and 97 percent of small businesses will not see their income taxes go up." 

As he made his remarks, President Obama was flanked by Vice President Joe Biden, who spent hours on Capitol Hill on New Year's Eve and New Year's Day wooing lawmakers in both chambers, working in concert with Senate Minority Leader Mitch McConnell, R-Ky. to craft the deal. The bill includes a nine-month extension of the expired 2008 Farm Bill, to September of 2013.

The extension runs 18 pages in the 153-page bill, and was immediately lambasted by critics when the Senate first passed the entire bill at 2:00 AM on Tuesday morning with a vote of 89 to 8.  It comes on the heels of a failed year-long attempt in 2012 to pass a new Farm Bill; last summer, the Senate and the House both approved versions of the legislation, though the House edition never made it to a full floor vote.  It sets the stage for a difficult year ahead as lawmakers attempt to create a new Farm Bill, revisiting the same territory but with changes in membership in crucial committees for the 113th Congress--and with many issues to address that were dumped out of the extension. 

The extension prevents a spike in milk prices, averting the so-called "dairy cliff," but does not protect dairy farmers.  It does not include disaster aid, and keeps intact the crop subsidies that President Obama has been pledging to eliminate since he first ran for the White House: The extension fully extends $5 billion in direct payments to farmers for fiscal 2013.  It is a victory for Southern farm interests.  It also slashes some funding for organic agriculture, clean water initiatives, and beginning farmer and rancher projects.  SNAP-Ed, a federal-state partnership that supports nutrition education for persons eligible for Food Stamps, also had a reduction in funding.

The extension also does not include the dairy market stabilization program that the National Milk Producers Federation and House Agriculture Committee ranking member Collin Peterson, D-Minn., sought, but that the International Dairy Foods Association and House Speaker John Boehner, R-Ohio, opposed.  Peterson voted against the bill, while Boehner gave a yea.

On Sunday, three different extension packages were offered; the package that Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., and House Agriculture Committee Chairman Frank Lucas, R-Okla., put together was entirely ignored.  It was a shocking turn of events, as was the willingness of the White House and House Majority Leader Harry Reid, D-Nev., to agree to the extension.  The three lawmakers all voted for the larger bill.

Other food and farming issues seemed to pale in the interest of preventing the spike in milk prices.  President Obama made not a single mention of either agriculture or the Farm Bill extension as he addressed the nation on Tuesday night.  And in the fact sheet the White House issued on Tuesday morning on the Senate bill, the single sentence about the extension, tacked on as the last line of the document, was about milk:  "Extends the farm bill through the end of the fiscal year, averting a sharp rise in milk prices at the beginning of 2013."

Though the bill extends the Milk Income Loss Contract program, which should provide some payments to dairy producers, National Milk Producers Federation President and CEO Jerry Kozak said the deal “is a devastating blow to the nation’s dairy farmers.”

“After months of inaction, the plan...amounts to shoving farmers over the dairy cliff without providing any safety net below,” Kozak said.

After she voted for the bill, Stabenow said in a statement early on Tuesday:

“It is critically important that the U.S. Senate has come together to prevent tax increases on middle class families and small businesses, extend unemployment benefits for those struggling to find a job, and end tax breaks for millionaires our country can no longer afford. This agreement accomplishes that, providing certainty for families and businesses and allowing our economic recovery to continue.

“Rather than embrace the Senate’s bipartisan farm bill which cuts $24 billion in spending and creates certainty for our agriculture economy, Sen. McConnell insisted on a partial extension that reforms nothing, provides no deficit reduction, and hurts many areas of our agriculture economy."

Later on Tuesday, during an impassioned speech on the Senate Floor, Stabenow added that it was “absolutely outrageous” that other expired agriculture programs were not included in the extension agreement. 

“Without consultation with me or the chairman in the House, we now have a partial extension,” Stabenow said.   “They not only do not extend all the titles, but they do not include critical disaster assistance.”

Stabenow vowed that when the 113th Congress goes into session, her committee "will once again begin work in the new year to enact a new farm bill that works for our farmers and rural communities as well as American taxpayers."

McConnell spokesman Michael Brumas defended McConnell’s action in the extension deal. 

“Sen. McConnell put forward a bipartisan, responsible solution that averted the dairy cliff and provided certainty to farmers for the next year without costing taxpayers a dime,” Brumas told the Associated Press.

But the National Milk Producers Federation's Kozak had a different opinion.

“These stop-gap efforts [of the extension] don’t even qualify as kicking the can down the road," Kozak said. “Despite the progress made in 2012 on the farm bill, we’re starting 2013 on a bad note."

“We oppose any farm bill extension of any duration that does not contain the Dairy Security Act, and resolve to work this year on achieving that as a long-term goal.” 

Senate Agriculture Committee Ranking Member Pat Roberts, R-Kan., who voted for the deal, said he was “pleased” that the bill included a farm bill extension through the fiscal year, as well as averted the dairy cliff.

“While this extension is not the best possible bill, I believe it is the best bill possible at this time,” Roberts said. “It provides consumers certainty by avoiding the dairy cliff, and it provides certainty to our producers and their lenders as Congress continues work on a farm bill in 2013.”

At the same time, the National Sustainable Agriculture Coalition (NSAC), which represents family and smaller, environmentally-minded farmers, declared the extension deal "a disaster for farmers and the American people,” because it is "blatantly anti-reform." In a statement after the Senate vote, NSAC cited the lack of "any workable dairy policy for the next year and any disaster aid for livestock and fruit producers" as particularly bad decisions.

"We are extremely disappointed in the Republican leader for proposing this deal and in the White House for accepting it," NSAC said.  "The message is unmistakable--direct commodity subsidies, despite high market prices, are sacrosanct, while the rest of agriculture and the rest of rural America can simply drop dead.”

“The deal also has the effect of keeping farmers from being able to improve soil and water conservation through enrollment in the Conservation Stewardship Program at the present time."

NSAC did commend the Agriculture committee leadership “for trying to pass a more responsible extension measure, and on behalf of our member organizations and the farmers they represent, we recommit ourselves to getting a true farm and food bill reform measure passed in 2013.”

The only good news for the reform minded:  If Congress passes a new Farm Bill before next October, the $5 billion in subsidy payments that are included in the extension will not be made.  

In an odd way, the extension is also a victory for anti-hunger advocates and a failure for the many critics of the Food Stamp program. Other than the cut to funding for the SNAP-Ed education program, the extension appears to make no major changes to Food Stamps, officially known as the Supplemental Nutrition Assistance Program, even though the Senate had proposed a small cut and the House Agriculture Committee had proposed a much larger cut in the Farm Bill legislation each chamber approved last summer.

Anti-hunger advocates and the White House opposed those cuts to Food stamps, which make up more than 70 percent of the Agriculture Department's budget.  Enrollment in the program for September hit an all-time high of more than 47.7 million people, and the Obama Administration regards it as a critical way of keeping people out of poverty as well as an economic booster for farmers and others in the food supply chain.

Making matters more complicated for the next Farm Bill: Mr. Obama's 2012 campaign to remain President seemed to prove that rural Americans are out of sync with the rest of the country: Polls showed that 59% had voted for Republican challenger Mitt Romney.  

In early December, in his first major speech after President Obama's re-election, Agriculture Secretary Tom Vilsack warned that rural America is on the brink of becoming irrelevant.

“Why is it we don’t have a farm bill?” Vilsack asked. “It isn’t just differences of policy, it is because rural America with its shrinking population is becoming less and less relevant to the politics of the country.”

Other items in the legislation...
In addition to preventing tax increases for most Americans, the legislation will delay automatic budget cuts to agencies like the U.S. Food and Drug Administration and the Centers for Disease Control.  Embedded in the massive bill are many other issues and perks, including for the food/farming supply chain.  

Restaurants will receive tax credits to update their infrastructure.  There is $222 million for Puerto Rico and the Virgin Islands, through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.  Algae growers will receive $59 million through tax credits to encourage production of “cellulosic biofuel” at up to $1.01 per gallon.  

Besides the Farm Bill fight, there's more drama looming on the even horizon between President Obama and Congress.  The legislation does not address the debt ceiling, and could add as much as $4 trillion to the national debt over the next ten years, according to a Congressional Budget Office estimate released Tuesday night.  Most of that is attributed to lost revenues or payments on refundable tax credits.  President Obama attributed the failure to address theses issues in the fiscal cliff deal to running out of time.

"Unfortunately, there just wasn’t enough support or time for that kind of large agreement in a lame duck session of Congress," President Obama said.  "And that failure comes with a cost, as the messy nature of the process over the past several weeks has made business more uncertain and consumers less confident."

Since the bill delays automatic spending cuts for two months, the next showdown will be over replacing those cuts, raising the debt ceiling and funding the federal government.  President Obama asked for "a little less drama and a "little less brinskmanship" from the members of the 113th Congress, who will be sworn in on Thursday.

President Obama has no public events scheduled during his stay in Hawaii, which is expected to end on Jan. 6.  He departed for the second half of his winter vacation at midnight on Tuesday, and was expected to land in Honolulu at 4:30 AM local time, rejoining the First Family, who have remained at their rental compound in the town of Kailua.  The President previously spent Dec. 22-Dec. 27 in Hawaii, before returning to Washington to deal with the fiscal cliff.

UPDATE, Wed. Jan. 2:  Vilsack issues a statement about the extension


*H.R. 8 - The American Taxpayer Relief Act of 2012, as amended and passed in the Senate, Jan. 1, 2013

*White House Fact Sheet: The Tax Agreement: A Victory For Middle Class Families & The Economy

*Congressional Budget Office: Estimate of the Budgetary Effects of H.R. 8

The Congressional Budget Office Score for the one-year extension

*Joint Committee On Taxation Analysis of the bill

*Roll call vote in the House

*Roll coll vote in the Senate 

*Transcript, President Obama's remarks


Jerry Hagstrom, founder and editor of the best online, subscription-only agriculture and policy newspaper The Hagstrom Report, cross-posts at Obama Foodorama.  If you're not a subscriber to The Hagstrom Report, you're missing crucial coverage. 

*Pool photo