Policy Journal: Lame Ducks Will Be Busy in November

October 28, 2010 06:08 AM

Lame Ducks Will Be Busy in November

Lawmakers typically stay in Washington into October in an election year. But Democratic leaders pulled the plug as September ended and lawmakers hit the campaign trail. They did address some key issues, but left still more work undone, potentially to be addressed in a lame-duck session that starts Nov. 15. Here’s what they were able to accomplish:

Budget resolution. The Senate and House passed a stopgap spending bill to fund the government through Dec. 3. The continuing budget resolution provides fiscal year 2011 funding at $8.2 billion below current levels. The savings come from reduced funding for Census Bureau operations (which received a major boost for the 2010 decennial census) and military base realignments and closings. The failure of Congress to complete any of the 12 annual appropriations bills before
fiscal year 2011 began on Oct. 1 made this a must-pass bill.

China currency. The House approved legislation to make it easier to identify illegal export subsidies. Some were concerned the bill would run afoul of World Trade Organization (WTO) rules and China warned the plan didn’t pass muster. But House Ways and Means Committee Chairman Sander Levin (D-Mich.) assured lawmakers the bill is “fully compliant with our international WTO obligations.” Since the Senate didn’t act, this could be taken up by the lame ducks in November.

As for what else is left to do:

Expiring tax cuts. The Senate couldn’t reach a deal on extending the 2001 and 2003 tax cuts that expire at the end of the year. House Democrats punted, too, since the Senate didn’t act. While most observers expect a one-year extension post-election, that would force lawmakers to revisit the issue in 2011.

Child nutrition. Lawmakers balked at reducing the Supplemental Nutrition Assistance Program in order to pay for increased spending in the Child Nutrition Reauthorization plan. A pledge from USDA Secretary Tom Vilsack to find a source for the $4.5 billion in new spending over 10 years wasn’t enough to win passage.

Biofuel incentives. The biodiesel tax credit remains lapsed (it ended on Dec. 31, 2009) and the Volumetric Ethanol Excise Tax Credit (VEETC) will expire Dec. 31, 2010, along with the 54¢ per gallon ethanol import duty. The House Ways and Means Committee has been mulling a 20% cut in the VEETC, but House Ag Committee Chairman Collin Peterson (D-Minn.) has pledged to fight efforts to trim the VEETC.

Food safety reform. The House passed its version of a bill in 2009. But in the Senate, Sen. Tom Coburn (R-Okla.) objected to the plan on the grounds that new spending in the bill was not funded.

Estate taxes. The estate tax went to zero for 2010 but will return to a 55% tax rate and a per-person exemption of $1 million in 2011 unless lawmakers act. This could be added to a bill that would renew other tax provisions set to expire at the end of this year. Current talk focuses around the 2009 estate tax levels: a 45% tax rate and a $3.5 million per-person exemption.

OMB nomination. Sen. Mary Landrieu (D-La.) kept her hold on the nomination of Jacob Lew to serve as director of the Office of Management and Budget.

Given this long list, if voters hand one or both chambers to Republicans, the lame ducks could be really lame.

The Budget and Agriculture: What’s at Stake

When the new Congress starts in 2011, it’s expected to focus on stemming the rise in government spending. But there aren’t nearly as many spending-cut tools now.
The projected budget deficit for fiscal year 2010 is $1.4 trillion, the second largest in terms of dollars.

As a percentage of gross domestic product, it’s the second largest since World War II.
Craig Jagger, chief economist for the House Ag Committee, says the budget baseline is key to putting together a new farm bill.

The baseline is “a 10-year projection of future program costs under the assumption that most laws continue indefinitely,” he explained to a Farm Foundation Forum. “To continue an existing program in the next farm bill, there is no cost—in other words, no need for an offset—as long as its provisions and funding levels haven’t changed.”

He said the Ag Committee’s baseline is $924 billion over 10 years, of which $696 billion is for nutrition.

Jagger added it’s a matter of when, not if, budget reconciliation will become a factor. Reconciliation requires authorizing committees like the House Ag Committee to change their mandatory spending programs to cut the deficit. It’s a tool that many in the Senate like, as it can’t be filibustered. The last reconciliation bill that affected agriculture was in 2006.

Push for a farm bill. House Ag Committee Chairman Collin Peterson (D-Minn.) has been preparing folks for an aggressive farm bill schedule. Why the push? “The longer you wait, the worse the budget gets,” Peterson says. Senate Ag Committee Chair Blanche Lincoln (D-Ark.) has “no problem with getting it done in 2011,” he adds.

The process can be slowed, however, by trying to find funds. Jagger recalls it took 16 months “to figure out how much money we had to write the 2008 farm bill. We were trying to get other committees to contribute their scarce baseline funds to the Ag Committee.” The panel ended up getting some $10 billion from the Ways and Means Committee, most of which went to nutrition programs in the bill.

What can be done? In putting together the 2008 farm bill, Congress used $4.5 billion in “timing shifts”—spending that is shifted outside the budget period. But PAYGO rules mandate any new spending must be “paid for” by reductions of an equal amount or new funding, so timing shifts are no longer a tool that lawmakers can use.

Another challenge that lawmakers will grapple with is that 37 farm bill programs totaling $9.8 billion have no baseline after 2012 (see below). “To reauthorize these programs, funding needs to come from other ag programs and non-ag sources,” Jagger says.

So, while the policies that make up the next farm bill will be important, how lawmakers construct those policies within current budget constraints may be the biggest factor affecting farm country.
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