Tough Work Ahead for Legislators

A look at how legislative items such as taxes, trade and the farm bill will fare under the new Congress.

For agriculture, there are significant issues moving forward that the ag community will be watching closely to see how new Congressional members address.

The most obvious legislative item important to agriculture in the 112th Congress will be the writing of the next farm bill. Reports are mixed on whether a bill will be written in 2011. Regardless, hearings will begin next year and educating new committee members will be important.

With the change in House leadership, Rep. Frank Lucas of Oklahoma will now chair the agriculture committee. As chair, Lucas says he will not address the 2012 Farm Bill immediately, saying the fiscal mood in Washington will be better in 2012. Lucas says there will be fewer dollars to work with but pledges he will work hard to protect the interests of farmers as the farm bill is developed in either 2011 or 2012.

While Republicans regained control of the U.S. House of Representatives and Democrats held onto the majority in the Senate, the new agricultural committees in each chamber aren't likely to touch farm subsidy programs, says Otto Doering, a farm policy specialist at Purdue University. There's even a good chance both committees will abandon attempts by current House Agriculture Committee Chairman Collin Peterson to eliminate direct payments, he says.

"Congressman Peterson's desire is to back off direct payments and, instead, strengthen counter-cyclical payments to make agricultural subsidies more reasonable and fair to the public," Doering says. "I think that's dead meat at this point as farm groups rally again to preserve the direct payment, particularly in this time of high commodity prices."

Federal spending on farm income subsidies is about $20 billion per year. Farmers are receiving the payments this year despite enjoying high prices for corn, soybeans and wheat. Even with high land rental rates, fertilizer and equipment prices, farmers can make a living with current crop prices, Doering says.

"The Republican House leadership indicates it will keep the direct payments fully intact even when prices are high," he says. "However, recognize that one of the leaders of the tea party movement is Dick Armey of Texas, a former whip for the Republican House under Newt Gingrich. There is nothing on earth that Armey hates more than agricultural subsidies. So we may see change."

Other important issues

Now as for the other big ticket items for agriculture. Doering predicts political and ideological differences between the divided House and Senate will stall movement on climate change issues, trade policy and economic stimulus legislation.

Tax issues, such as the estate tax and capital gains tax likely will be one of the first items addressed - possibly in the lame duck or within the first days after Congress arrives in January. The Bush tax cuts expire at the end of 2010. Some media reports indicate President Obama may be willing to expand the tax cuts for two years as the nation struggles to get back on its feet.    

The ethanol tax credits expire at the end of 2010. The hope by ethanol supporters is that legislators can pass a one-year extension, possibly along with tax legislation that moves at the beginning of the year if not during the lame duck session.

Trade also has a more positive tone with a Republican led House and greater number of Republican Senators. Stalled trade agreements with Colombia, Panama and South Korea may finally have a chance to bring the benefits to agriculture that ag groups have touted for the past two years.

However, Doering fears that Washington could enact risky import tariffs as a means of tackling the U.S. trade imbalance and fail to make the necessary investments in technology and the labor force to regain a competitive global edge.

In a release from the American Farm Bureau Federation, its president Bob Stallman says the group would also be working with congressional members on "common-sense solutions on environmental issues like the Clean Water Act and greenhouse gas regulations."

National Corn Growers Association President Bart Schott, a corn farmer in Kulm, N.D., says he looks forward to working with the new Congress. "From trade agreements to the farm bill, food safety to ethanol expansion, inland waterways infrastructure to onerous regulations, there are a number of issues important to corn farmers that we hope to see addressed."

Doering took a more pessimistic tone, questioning whether the tremendous splits of values on many ag issues may reach the "point where there is a refusal to walk sort of a common-sense road down the middle," Doering adds. "Whatever we see in terms of stimulus of the economy through expansion by the Federal Reserve, reduction in spending and whatever else isn't going to bring about much change."

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