State of the Union: What's Potentially Key for Agriculture

January 26, 2010 06:00 PM


Roger Bernard, Farm Journal Policy & Washington Editor

The State of the Union. It's a speech used by Presidents to not only tell the U.S. House and Senate how the country is doing, but it also is used as a platform by the President to lay out priorities for the year -- or years -- ahead.

And he's required by the U.S. Constitution to do it:

"He shall from time to time give to Congress information of the State of the Union and recommend to their Consideration such measures as he shall judge necessary and expedient. " — Article II, Section 3 of the U.S. Constitution

President Barack Obama delivers his message to the Congress and country tonight in the wake of the stunning Massachusetts senate race results which saw Republican Scott Brown defeat the Democratic candidate for the Senate seat that had been held by the late Ted Kennedy (D-Mass.).

What is agriculture's stake in the speech? Sometimes, it can be a positive not to be mentioned in the State of the Union as that means there aren't viewed to be "problems" in at least that sector that need to be addressed.

But it can also serve as a springboard for action. Recall that the mere mention of ethanol by then President George W. Bush led to a flurry of legislative action and thus investment into the sector, resulting in a massive expansion of ethanol production and demand for U.S. corn.

Obama's address to the nation is now expected to focus on jobs and the economy, while still maintaining a push for the broad agenda the administration pursued in its first year in office.

Of matters that agriculture should be watching, it will include the proposal to freeze government spending for the remaining three years of President Obama's term in office. The freeze applies to non-defense and non-security-related areas of the budget and won't apply to Social Security, Medicare or Medicaid.

As a result, the freeze targets spending in discretionary areas that total around $447 billion, or 17%, of the budget.

It's estimated to trim the level of budget red ink by a paltry $15 billion in fiscal 2011. Paltry? Consider that reduction would come from what's estimated to be at least a $1.3 trillion budget deficit.

Any mention of climate change/cap-and-trade will be of interest to agriculture. With key lawmakers now signaling that prospects for a sweeping version of the legislation are all but dead, it will be interesting to see how much focus Obama gives it tonight.

Sure there will be more areas that could affect agriculture, but those are the key areas to get you started as Obama addresses the nation. Plus, details -- the real important stuff -- will become more apparent next week with the administration's budget proposal for Fiscal 2011.

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