Update on Farm Bill, Fiscal Cliff and Spending Issues

October 2, 2012 11:28 PM
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via a special arrangement with Informa Economics, Inc.

Nov. 6 election results will largely determine length and scope of lame-duck session

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

Congress is on its election break and will return a week after Nov. 6 elections for an unspecified number of weeks for what's called a lame-duck session. That could run from two to five weeks or so, depending in large part on the attitude of lawmakers and the Executive Branch following those elections.

The next path for a new farm bill could take several fronts, including being part of any “grand bargain” during the post-election session dealing with so-called “fiscal cliff” issues including expiration of tax cuts and extenders. If that route is not taken, decisions must be made regarding how long to give a new Congress time to complete a farm bill. Some lawmakers and farm groups want a new bill no later than March 2012, while others see a logical argument for providing the new Congress another year to work on a new measure. The eventual timeline will determine how long the 2008 farm bill is extended and in what manner.

Besides a new farm bill timeline and extension details regarding a 2008 Farm Bill extension, other issues include the overall cuts to the farm bill baseline ($23.1 billion in Senate bill; $35.1 billion in House bill), the size of the food stamp funding cuts ($4 billion in Senate and $16.1 billion in House bill), and whether or not to include a farmer option for target/reference prices (contained in House bill but not the Senate).

Fiscal matters ahead include the expiring 2001 and 2003 tax cuts, tax incentives including the lapsed biodiesel tax incentive, estate tax and alternative minimum tax issues, as well as other potential items like any extension to the expiring payroll tax holiday (odds are dimming for this). Some will be dealt with in the lame duck, perhaps with a timeline of only a few months for a new Congress to deal with them.

Bipartisan negotiations in the Senate are continuing over attempts to find a compromise on the expiring tax cuts and avert automatic spending reductions at year’s end. Senate Majority Leader Harry Reid (D-Nev.) said a bipartisan group of eight senators is engaging in serious talks on how to resolve the fiscal cliff. The group is developing options to address the tax and spending issues, modeled on $4 trillion deficit reduction plan developed by the president’s Commission on Fiscal Responsibility and Reform in 2010.

As for spending matters, the current continuing resolution (CR) for Fiscal Year 2013 spending runs through March 27. Appropriators are continuing their push for clearing a catchall FY 2013 spending bill in the lame-duck session, but conservative opposition and a limited legislative calendar could impact those plans. Senate appropriators last week released a draft of the only FY 2013 spending bill that had not yet been released, the Interior-Environment spending measure. Their hope is that action can begin on a single omnibus package in the lame-duck session. (The House has passed six fiscal 2013 measures, while the Senate has yet to take up any.) Waiting until current spending runs out would mean the next Congress would have the final say on the bills. House conservatives do not like a massive omnibus measure few would have time to review. White House officials seems content to wait until next year, betting the elections could improve the prospects for funding its priorities.

Meanwhile, the White House is ordering federal agencies to plan for the coming fiscal year as if Congress will undo the looming sequester (across-the-board) cuts. The Office of Management and Budget on Friday said, “Agencies should continue normal spending and operations” in early Fiscal 2013, which begins Oct. 1. This message came as part of a document OMB routinely issues each year in late September detailing how federal agencies should operate under stopgap continuing resolutions. In its bulletin on this CR, OMB had to at least mention the threatened sequester, if only to largely tell agencies to ignore it — for now. “If necessary, the bulletin will be amended to address that sequestration,” OMB said. The Pentagon is also telling military leaders and civilian managers to proceed with operations as planned. “We do not want our programs, personnel and activities to begin to suffer the harmful effects of sequestration while there is still a chance it can be avoided,” Deputy Defense Ashton Carter wrote in a Sept. 25 memorandum. He added, “commanders and managers should not alarm our employees and their families by announcing personnel actions related to sequestration or by suggesting that these actions are likely.” The looming cuts would total about $109 billion in 2013, half hitting the Defense Department , and they would be spread equally across most programs and activities.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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