From trade to the tax code, it’s political Wheel-of-Fortune.
While Congress has received much praise for passing a farm bill, there is still work to be done that impacts the livelihood of America’s farmers. A few items deserving of their attention include Trade Promotion Authority (TPA), Trans Pacific Partnership (TPP), Section 170 of the tax code and USDA’s reports.
Through TPA, Congress provides a set of laws to guide administrations in pursuing trade agreements. Former Senate Finance Committee Chairman Max Baucus (D-Mont.), ranking member Orrin Hatch (R-Utah), and House Ways and Means Chairman Dave Camp (R-Mich.) introduced TPA legislation Jan. 9, 2014. The legislation introduces timelines for up or down votes without amendment on trade pacts, directs the administration to pursue specific negotiating objectives and expands the role of Congress in negotiations. The bill would have a four-year duration.
Additionally, the TPP agreement hangs in limbo. Mexico’s Secretary of Economy Guajardo Villarreal told the Financial Times that governments involved in the 12-country TPP talks were unlikely to offer any concessions until President Obama had the backing of Congress.
"From a negotiating point of view, things will go along slowly until that happens," Villarreal said.
Meanwhile, Senate Minority Leader Harry Reid (D-Nev.) surprised some, announcing he opposes TPA. "I’m against fast track," Reid says, referring to the former name given to TPA. "Everyone would be well advised not to push this right now."
However, Reid could just be angling to get Republican concessions for supporting TPA. Sen. Wyden, who will take the helm of the Finance panel with the departure of Baucus, has signaled he is in no rush on TPA legislation and won’t likely push the Baucus package.
While Congress plays Wheel-of-Fortune with farmers profit potential by hurting trade relations, Section 179 expensing is not likely to make it on the puzzle board until after election in a lame-duck session of Congress. The turn of the calendar to 2014 meant Section 179 expensing dropped back to $25,000. It was one of a host of tax extenders that expired at the end of 2013 that Congress did not act to renew.
As of now, there’s no indication if the effort would simply extend the current level or raise it. Some lawmakers in both political parties want to hold all such issues until Congress addresses a major tax reform bill.
Nothing New. To top it all off, a study of USDA reports completed by the University of Illinois didn’t find a "smoking gun" for the difference between trade expectations and USDA data. The report showed that the difference is nothing new—it’s been going on since 2006.
"The explanation with the most merit is that unresolved errors in production estimates for corn led to the large surprises," researchers explain in the report. "NASS stock estimates undoubtedly encompass sampling errors for both production and stock estimates, and it is likely that unresolved sampling errors for corn production estimates are large enough to explain the surprises."
The report’s authors included options that would help the situation, with most involving USDA shedding more light on the process it uses to come up with the data from the World Ag Outlook Board relative to the Supply/Demand report. They also suggested NASS provide more information on their surveying and estimating procedures.
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- March 2014