A Wait-and-See Game on the Hill

November 26, 2012 07:25 PM

Policymakers regroup and pick up pre-election issues

November’s elections loom large in terms of how actions will unfold in 2013 on the Washington scene. The results and control of the legislative and executive branches will dictate how the policy wheels turn—or don’t—in our nation’s capital.

1. Election Impacts. U.S. government leaders make a difference in a host of matters, including, in the legislative branch, which issues are brought to a vote in Congress, and in the executive branch, how new laws are implemented. Key issues that will affect agriculture policy include how Washington deals with the impending "fiscal cliff" (see No. 2), health care reform implementation, and the amount and tenor of regulations.

2. Fiscal Cliff. Many lingering economic, tax and budget issues are not expected to be handled
with in Congress’ post-election, lame-duck session. The turn of the calendar will force lawmakers and White House officials to deal with another bump up in the debt limit and the beginning of a lengthy debate regarding tax policy reform. Other issues the lame duck and new Congress must grapple with are the estate tax and expired or expiring tax extenders, including the lapsed  biodiesel tax incentive. The latter could significantly impact your farm business depending on
which way it is resolved.

3. Farm Bill. Election results will help determine the timeline for a new farm bill, but the odds favor an extension to the 2008 farm bill. When a new farm bill is finalized, it will feature a  renewed focus on revenue assurance safety nets. If this issue isn’t dealt with post-election, an extension could affect it. If pushed to 2013, the farm bill debate could be influenced by the Congressional Budget Office with new budget baseline estimates in March. Additionally, we can expect crop insurance payouts to play a growing role. While those payouts were a lifeline to many producers during the past two years, the lofty payments have already caught the attention of budget watchers and some groups who have a history of attacking farm safety net programs.

4. Energy Policy. There are several key issues in this area: (1) Potential changes in the Renewable Fuels Standard (RFS) should the 2013 corn crop result in another below-trend yield. This could be
an issue even if the Environmental Protection Agency maintains its decision post-election  regarding requests from several states to waive the ethanol mandates under the RFS. (2) Regulatory battles regarding "fracking" in some states (North Dakota, Pennsylvania and others) will continue to percolate as the search continues for more U.S. oil supplies. (3) Whether or not
the lapsed biodiesel tax incentive is retroactively extended and, if so, for how long. This issue will be punted into 2013 or even cast aside if no agreement is reached post-election.

5. Trade Policy. Other countries, notably China, have inked a spate of new trade agreements while the U.S. has lagged. The proposed Trans-Pacific Partnership (TPP) should accelerate. For the first time, the TPP would include sanitary and phytosanitary issues critical to U.S. farm exports. Some countries have used tactics in this area to thwart imports of U.S. goods. Another factor is whether Japan will be allowed entry and put its ag sector on the negotiating table.

Beyond these five areas, there is another: Recovery from the drought will take time. Government is powerless when it comes to Mother Nature, so her plans for 2013 might be the biggest wild card. They could certainly impact some of the above matters as Washington churns through 2013.

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