John Block Reports from Washington

Last week, I was down on the farm in Illinois. I had hoped to watch the corn planter crossing the field – back and forth, back and forth. But, it didn’t happen. It just didn’t get dry enough. This week, the planter is rolling. We could be half done with corn planting, but rain is again in the air. And we haven’t even thought about the soy beans.

The struggle to get the seed in the ground is pretty universal in the Midwest. It makes us worry. The markets don’t know what to do. They are all over the place. Weren’t we worried about drought just yesterday? I think we can still raise a reasonably good crop. Maybe not a record crop. Every year is different. Spoon River, which runs through some of our land, was flooding all over the fields just three weeks ago. It’s down now. We are going to plant those fields.

We have been reading all spring that, with record planting intentions, we will be buried in grain and prices will collapse. Well, maybe now they won’t go down quite as far. We don’t have to have $8 corn, but $3 corn would be hard on the cash flow. The farming business is as volatile and unpredictable as any business. Hold on tight. It’s going to be a bumpy ride. At least we are producing a product that is absolutely essential. Is there anything more vital than food?

When I was on the farm, the weather and planting delay was all I could think about. However, we did have baby pigs born each day. Our mother sows were really shelling them out – three or four litters every day with 12 or more pigs each. The hog market has shown some strength, and that’s encouraging.

The farm economy across the country is strong. We’re going to get a farm bill passed this year. Our exports, although a little slow now, will pick up this fall.

This week, the Farm Broadcasters Association brought a group to Washington to meet with Secretary Vilsack. One evening, we had a reception at the Capitol, and Congressman Collin Peterson, with his band, was playing and singing country songs. That will lift your spirits. I loved it. Maybe that’s why I’m optimistic.

Let’s have a great year.
 

Last week, I talked about the farm bill and prospects for passage. This week, I want to focus on a series of current issues. These are my thoughts:

Immigration Reform

We desperately need to get it done. If we don’t, who’s going to milk the cows? Who’s going to butcher the hogs? Agriculture is pushing to pass the legislation. Even president Obama is behind a bill. It’s certainly not done yet, but I am still optimistic.

Spending and Budgets

We don’t have any consensus here. The House budget, according to Paul Ryan, if it passed, would bring us into balance in 10 years. The Senate budget relies much more on new taxes. Unfortunately, it doesn’t do anything to deal with the run-away entitlement programs of Social Security, Medicare, and Medicaid. President Obama’s budget takes a small step toward reducing the entitlement programs, but still projects deficits as far as the eye can see.

There is one item in the President’s plan that has gone almost unnoticed. In order to raise more money, he wants to take away the relief that small businesses and farmers got with estate tax changes passed at the end of last year. He wants to raise the tax rate from 40% to 45% and lower the exemption from $5 million to $3.5 million – also eliminate the inflation index. After the improvement in the law that we just got, he wants to take it away.

I don’t expect that will happen. I don’t think any of the three budgets will be enacted. Will we get a compromise bill? Even that is doubtful. A side note is that Senator Max Baucus (D-MT), Chairman of the powerful Senate Finance Committee, has announced his plan to retire at the end of this term. He has been a champion for ag interest – a supporter of immigration reform and a defender of reducing the burden of the death tax. I worked with Max Baucus when I was Secretary of Agriculture. He will be missed.

Syria

There is no easy solution. Do we arm the opposition? Do we establish a "no fly" zone? President Obama is being criticized for not doing enough. I think he is right to hold back. The thing we don’t need is another war. Let the Middle East boil in their own oil. They don’t want us to help them anyway.

In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.

Next week, I will be down on the farm. Let’s get that planter in the field.
 

For more than a year now, the Congress has worked on a new farm bill, in fits and starts, but has never been able to get it together. We are farming now under an extension of the old bill. I think that, at long last, we are positioned to get a new 5-year bill by this fall. Both the House and Senate Ag Committees plan to start mark-up this month.

The process is still going to be messy. A lot of compromises will be necessary. I would expect that direct payments that have been a main stay of recent farm bills will be gone. Direct payments, in these days with a booming farm economy, are hard to defend. You don’t have to do anything to earn the money.

Look for crop insurance to take center stage, filling the role of risk management. Crop insurance last year served as a life preserver for many farmers caught in the severe drought. So, in that regard, crop insurance did the job. But on the other hand, it cost a lot of money. Insurance paid out 17 billion dollars in indemnities.

Of course, farmers must pay for crop insurance, but it is heavily subsidized. There will be some pressure to require farmers to pay more for the insurance. There may be requirements tying conservation compliance to crop insurance. After last year’s drought, I expect more farmers to sign up for insurance this year.

Besides costing too much, there are other criticisms of crop insurance. It can be argued that it encourages some farmers to plant certain crops – not because of market incentives, but because of the crop insurance guarantee. Still, at the end of the day, crop insurance will be the primary safety net for farmers.

The House will be looking for ways to save 38 billion dollars over the next 10 years. A significant part of that savings will come out of the Food Stamp Program. I cannot imagine how we got to where we are today, spending more than 80 billion dollars on food stamps. The Senate will not be willing to cut the nutrition programs as much as the House. They will have to find middle ground.

When all the dust clears, I think we will get a farm bill. Considering how difficult it is to pass this bill – makes me wonder if there will ever be another.

In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.

The first day of May isn’t far off, and we don’t have one grain of corn planted. Last year, we had finished planting corn by May 1. After last year’s drought, the whole Midwest is living with wet fields and cold soil.

I remind myself that our time will come. It always does. "Patience, patience."

So today, let’s concentrate on another issue. The Congress is working to reauthorize the Animal Drug User Fee Act. This has revived a longstanding dispute over the use of drugs in raising and treating animals.

Critics argue that the use of drugs on animals results in resistance to the drugs. The livestock industry counters with a number of studies, including the Food and Drug Administration stating that results indicate that the risk to human health is "negligible."

In the New York Times, Professor Charles Hofacre, University of Georgia professor of veterinary medicine and the National Center for Food Safety pointed out that there is no connection between antibiotic resistance and livestock use of antibiotics. Science is on the side of the livestock industry on this one.

There is another way to look at this whole question. People take medicine and antibiotics for all kinds of health problems. When suffering, take something for pain relief. Do you have an infection? Use some antibiotics.

Isn’t the humane thing to do when your pigs get the flu is to doctor them? If your dog was suffering, you wouldn’t hesitate to get medicine for him. Where are the animal rights people? Where is the Humane Society? They should be standing up to support the animals.

We don’t give our pigs antibiotics all the time. However, when baby pigs get sick, we consult with our veterinarian and give them the prescribed medicine. Healthy animals provide healthy food. Antibiotics are a vital tool in managing herd health. The consumer should want a healthy food supply.

In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.

At long last, the U.S. debt is front and center in the spotlight. We had gone 4 years without the Democratic Senate even passing a budget. In that timeframe, the Republican House did their legal obligation by passing budgets each year. Of course, that made them an easy target because they proposed to reduce spending on a lot of popular projects.

Three cheers for the Senate this year. They passed a budget. President Obama just announced his budget last week. By law, he was supposed to present his two months ago, but better later than never.

I credit the President in his budget for targeting entitlement programs for cuts. He has never publicly done that before and has a lot of his liberal base very unhappy. The President wants a "grand bargain" with very modest reductions in the entitlement program. He is asking for 700 billion dollars in new taxes. His policies are budgeted to replace the across-the-board sequester that is pinching a number of our spending programs.

I have before me a graph of the debt projections of the three different budget proposals. This is presented by the Washington Post – hardly a conservative paper. President Obama’s plan projects a spending deficit of 744 billion dollars for the coming fiscal year.

With his plan, our 17 trillion dollar debt today would grow over the next 10 years to 25 trillion dollars. The Senate Democrat plan is almost as bad. The chart I am looking at has our debt escalating up over the years at about a 30-degree angle. Contrast that with the House GOP plan which has our debt line almost flat. It projects a balanced budget after 10 years.

I’m not suggesting that the House plan is perfect. It can be argued that some parts of it are unrealistic. However, the President’s plan that has us looking at a 25 trillion dollar debt ten years out is unacceptable. Keep in mind that defense, Medicare and Social Security make up 60% of the budget. Wouldn’t you think we could raise the retirement age? When Social Security was created, the life expectancy was 65. Social Security began paying after most people were dead. We live a lot longer today.

Raise the retirement age. Our young children are being burdened with debt every day. It’s selfish.
Politicians don’t want to take anything away from their voters. They could be voted out of office.
Let’s hope that the attention that our deficit and debt are getting today will give our elected officials the courage to act in the national interest.

In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.