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Farm Bill Update 2012

Thursday, November 1, 2012
filed under: Marketing/Risk Management

By John Gordley

Congress left Washington in September after passing a Continuing Resolution to fund the federal government at FY-2012 levels through next March. Despite efforts by more than 90 farm organizations in the “Farm Bill Now” coalition, the House leadership refused to bring the farm bill reported by the House Agriculture Committee in July to the floor for a vote. This Policy Brief & Outlook looks at the possible impacts of the November 6 elections and the ensuing lame duck session of Congress during November and December — including the so-called “fiscal cliff” — on prospects for either completing a new farm bill or extending the 2008 Act into 2013.

In addition to making no progress on a new farm bill, Congress departed without extending authorities under the 2008 farm bill or acting on disaster assistance. Due to differences over funding for SNAP (food stamps) and commodity programs (particularly Direct Payments), an extension would have been nearly as difficult as reconciling differences between the House and Senate bills. Senate Agriculture Committee leaders resisted taking up the disaster measure passed by the House before the August recess, arguing that it isn’t broad enough and that more comprehensive coverage is included and paid for in both farm bills.

Impact of Elections on the Lame Duck Session

With Congress out of session until November 13, what is the outlook for this fall’s elections and their impact on action during the lame duck session? Current expectations are that the Republicans will maintain control of the House, while the Senate is rated a toss-up. Regardless of which party is in charge, however, neither is likely to have the 60 votes needed to invoke cloture and shut down filibusters on controversial legislation. So the gridlock that has characterized the 112th Congress can be expected to continue in the 113th.

The outcome of the contest for President could be more consequential. If President Obama wins, the political equation will be similar to what we’ve had for the last two years. All concerned will need to accept the situation, and try to start a new effort to find consensus on key issues, possibly including the farm bill, starting in the lame duck session. If Governor Romney wins, Republicans may decide to defer some of these decisions until his administration takes office in January.

The Looming Fiscal Cliff

The “fiscal cliff” includes expiration of the Bush-era tax cuts, including a reset of estate taxes to 2001 levels, the need to increase the national debt ceiling when the current limit is reached in late December, and sequestration of $1.2 trillion in defense and non-defense spending required by the last year’s debt increase agreement, starting in January.

Regardless of the post-November 6 political situation, extending the Bush-era tax cuts will continue to be hamstrung over whether the tax cuts also should be extended for the top two percent of earners. Defense and non-defense advocates are sounding alarms about the massive layoffs and program cuts that would be required if sequestration is allowed to go into effect. There is no assurance that agreement on these issues can be reached, in addition to or as part of a debt limit increase.

Lame Duck Action on the Farm Bill?

So what does all this mean for efforts to complete the 2012 farm bill before the 112th Congress adjourns sine die in late December? If they don’t finish, all of the work on the bill will be lost, and the new Congress will need to “start from scratch.” Neither a re-elected President Obama nor a President-elect Romney will want to find this task on their “to do” list for next year. This would argue that there’s still hope to resolve differences over SNAP and commodity programs within the context of the bigger items needing to be addressed during the lame duck session.

However, there are concerns among agriculture supporters that Congress may be looking for greater savings from farm programs, potentially including crop insurance, as offsets to pay for reduced cuts in discretionary program spending. This could unbalance the carefully crafted compromises reflected in both the Senate and House farm bills, and cause the effort to complete a new bill to collapse.

The alternative would be a three-month or one-year extension of the 2008 farm bill, which some agriculture committee leaders have already stated is a foregone conclusion. Most farm groups have opposed this approach, since it would only extend current uncertainty among farmers and ranchers over the safety net provided by farm programs. It would also subject the level of funding for a new bill to revision of the budget baseline by the Congressional Budget Office in February.

Higher crop prices in 2012 will likely result in CBO raising cost estimates for important programs in both the Senate and House bills, including Revenue Loss Coverage. Increased projected participation in the Supplemental Coverage Option (SCO) insurance program would also increase costs. Further complicating this issue is whether the outgoing Congress decides to reverse the Administration’s decision to exempt crop insurance from sequestration cuts. This decision reduced prospective spending cuts in overall farm programs by half, from $16 billion to $8 billion.

Message to Congress

Farmers should continue to call on current members of Congress to finish the 2012 farm bill when they return to Washington in November. While work on some past farm bills has extended from the 1st Session of a Congress to the 2nd Session of a Congress, no Congress has ever failed to complete farm legislation before final adjournment, thus requiring that work from scratch again within a new Congress.

With the far-reaching consequences of this summer’s drought and the outlook for next year’s crops unknown, this would be the worst possible time for Congress to fail to meet its responsibilities. We need a new farm bill now!

John Gordley heads Gordley & Associates, which provides representation for the National Sunflower Association in Washington, D.C. He established Gordley Associates in 1987, after serving five years on the staff of Senate Majority Leader Bob Dole, responsible for agriculture and agricultural trade issues. Gordley is a current member of USDA’s Grains, Feed and Oilseeds Agricultural Technical Advisory Committee (ATAC) on trade, and he has served as chairman of the Agriculture Biotechnology Forum and the Ag Biotech Planning Committee.
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