More than two months past its statutory deadline for submission to Congress, President Obama unveiled a $3.77-trillion FY2014 budget recommendation, a plan designed to goad congressional leadership back to the negotiating table on spending reductions, but which includes new taxes, user fee recommendations, a re-invention of several programs and new spending overall. The Administration says the budget reduces the deficit by $1.76 trillion over 10 years, and replaces the 10-year, $1.2 trillion in sequestration cuts beginning in October, 2013. The White House budget plan, $160 billion higher than the Congressional Budget Office projected in February, is viewed by Congress as guidance, outlining both program and political spending priorities, but does not bind House and Senate Appropriations Committees. Some House Republican budget hawks declared the White House budget “dead on arrival,” and specific recommendations took heat from both sides of the aisle and both sides of Capitol Hill. Still there are program recommendations which fiscal conservatives in both parties see as significant concessions by the White House in the larger battle to control spending and the deficit, include reductions in Medicare spending, re-invention of Social Security benefits calculations and some business tax reforms. Obama said his budget allows him to “stand by the offer” he made to House Speaker John Boehner (R-OH) last December, and his budget contains all the proposals he made then. The Obama budget is found here: www.whitehouse.gov/omb/budget/Appendix. Below are snapshots of relevant agency funding proposals.
U.S. Department of Agriculture: The Administration sees budget savings at USDA – recommended to be funded at $146 billion for 2014 – through ending direct program payments, reducing federal crop insurance premium subsidies and consolidating conservation programs. Direct payments and crop insurance premiums would create a savings of about $37.8 billion over the next decade, the Administration said. Killing off direct payments and consolidating conservation programs have been embraced by both House and Senate Agriculture Committees, but the crop insurance tinkering is likely to be rejected even though the White House says it alone will save about $7.5 billion over 10 years. Rep. Collin Peterson (D-MN), ranking member of the House Agriculture Committee, told reporters that whether Democrat or Republican, most administration budget requests wind up generally ignored, signaling crop insurance is likely safe for now. Increases in spending were recommended for livestock disaster assistance, biofuels research and broad ag research, again in line with both House and Senate Farm Bills. The White House also stepped into a couple of political mine fields by recommending no money be spent for the inspection of horses moving to slaughter – even though three companies and several native American tribes are in the process of setting up horse slaughter facilities – and defunding of the federal catfish inspection program. Included is a $1-per-head increase in federal grazing fees paid by cattlemen who graze animals on federal forest lands managed by USDA; a $500 fee to companies who want USDA to certify their products meet USDA standards for biobased products; a new fee for companies whose products are linked to food contamination outbreaks; and a new fee for Natural Resources Conservation Service for general conservation planning assistance.
Environmental Protection Agency: The FY2014 budget recommendation for EPA is $8.15 billion, or about $296 million less than FY2012. The agency says, however, the reduction won’t interfere with its efforts on climate change, air and water protection and chemical safety oversight. The climate change effort is pegged at $176.5 million to “work with stakeholders and partners” to cut greenhouse gas emissions through “careful, cost-effective rulemaking and voluntary programs.” Enforcement overall is asking for $625 million to maintain the strength of core national programs … and for the New Generation Compliance program. On nitrogen/phosphorus runoff control, the agency is seeking an additional $15 million to support states, interstate agencies and tribes on nutrient management control. Chemical safety – including “those used in the production of the food we eat” – is looking for $686.2 million.
Food and Drug Administration: User fees on regulated industry – mainly to pay for implementation of the Food Safety Modernization Act – make up the bulk of new spending at FDA, according to the White House. FDA’s budget is set at $4.7 billion for 2014, an $821-million or 21-percent increase over this fiscal year, and $1.5 billion of the total is targeted at food safety. However, almost 95 percent of the FY2014 increase is pegged to new user fees for FSMA facility registration – imposed on companies annually if they register under FSMA – and new fees for domestic and new import inspections. The new import inspection fee would carry an exemption for small businesses and a cap for large importers. Most of the new fees would require congressional authorization, and several – including the registration fee – were explicitly rejected by Congress during FSMA consideration and as part of previous administration budget requests.
Offering what many see as an olive branch to congressional fiscal conservatives, the Obama FY2014 budget contains several tax code revisions, including a recommendation to create a reserve fund that would be “revenue neutral” and would enable several tax rules for business. However, that gesture is tempered with a proposal to return the federal estate tax to its 2009 level, while at the same time, imposing a 28-percent limit on the value of deductions available to high-income taxpayers, and implementation of the so-called “Buffet rule,” under which families earning more than $1 million per year would pay a minimum of 30 percent in federal income taxes. Also included is a one-time tax credit for small businesses that increase their workforces, expansion and permanent status for the child tax credit and the earned income tax credit. Within the reserve fund proposal are prospective actions, including a permanent research-development tax credit; limiting businesses to deducting interest expenses earned on overseas subsidiary profits only when those profits have been transferred to the U.S. parent company, a “mark-to-market” tax on derivatives contracts and changes in gains/loss calculations, but the document is silent on any action to reduce the overall corporate tax rate from the current 35 percent to somewhere below 30 percent.
With the fiscal cliff, sequestration, House and Senate budget resolutions and the Administration’s budget proposal now history – not to mention the Congressional Budget Office’s baseline projections on available spending – both Senate and House Agriculture Committees are beginning to shift into a higher gear on 2013 Farm Bill action. Sen. Debbie Stabenow (D-MI), chairwoman of the Senate ag panel, says she’ll begin her committee’s markup this month – “We will have to see if it’s possible; right now, we can’t set a date” – with a new challenge brought to the table by her new ranking member, Sen. Thad Cochran (R-MS), a former ag committee chairman. While Stabenow and former ranking member Sen. Pat Roberts (R-KS) were able to abandon direct payments in favor a risk-based approach in the 2012 Farm Bill passed by the full Senate – action opposed by southern producers – Cochran will likely try to force rewrite of the commodity title to reflect retention of some formula including target prices, marketing loans and deficiency payments, similar to the option taken by the House Agriculture Committee in its 2012 bill. Stabenow is not wedded to the 2012 direction her panel took on how to reinvent direct payments, and has said since she took over the committee she’s willing to work with her committee members to ensure reforms are both economically and geographically inclusive and fair. She added she wants “a middle ground that will address colleagues in the South,” but maintain reforms from 2012. Cochran, for his part, is reported to be eyeing some version of a target price program as “more affordable.” Meanwhile, Rep. Collin Peterson (D-MN), ranking member of the House Agriculture Committee, told a Midwestern radio station that he sees the House actually finishing a comprehensive Farm Bill before the Senate. Peterson said the House ag panel is shooting for markup “around the week of May 6,” and that he and committee chairman Frank Lucas (R-OK) have twice met with the Senate’s Cochran, explaining, “I think it’s fair to say Lucas and I – and Cochran – are kind of on the same page, and the Senate, not so much.” Peterson speculates that without Cochran’s support, a Senate Farm Bill faces a steep uphill battle. Both House and Senate ag panels are shooting for a pre-August enactment of a five-year Farm Bill. In a related development, a coalition of 56 Christian and Catholic groups under the aegis of the National Council of Churches and Church World Service, lobbied the Hill, calling on members to enact a five-year Farm Bill soon, but a bill that does not cut nutrition/food stamp programs, conservation programs or new farmer assistance programs. They also backed President Obama’s recommended reinvention of U.S. food assistance overseas, a proposal that would replace commodities with cash in some emergency food aid.
The unveiling of the Senate’s bipartisan immigration reform package was set for last week, but it’s been reset for Tuesday as negotiators work feverishly to get every stakeholder group on board. While a “path to citizenship,” and general business-labor union issues seem to have been overcome, talks between the United Farm Workers and ag employers continue over how to best ensure enough ag workers at fair wage rates. The good news is that both sides appear to at least be close to agreement on the wage rate issue, and this may clear the way for finalizing the ag worker sections of the Senate bill. Sen. Dianne Feinstein (D-CA), who’s pushed for guest worker visa reform, told reporters “we have a deal on wage rates and a visa cap,” but declined to give details. The Agriculture Workforce Coalition, however said there is no deal, but said, “We’re still working diligently and trying to finesse the final details.” The Senate Gang of Eight – Senators who’ve spent months working to create a comprehensive, bipartisan immigration reform package – have not hesitated to put pressure on both sides of the negotiations to reach an agreement lest they be left out of the legislative package when it’s set for a hearing April 16 in the Senate Judiciary Committee. For the aggies and UFW, the issues are prevailing wage rates for farm workers and how many foreign workers would be allowed to enter the U.S. under a “guest worker” visa program. The American Farm Bureau Federation says its goal is three-fold: Addressing the legal status of the current workforce; making sure growers can keep the workers they have; and making sure a new guest worker program works, i.e. enough workers can enter the country to meet ag needs. For the UFW, it’s all about wages and trying to control the number of immigrant workers so they don’t compete with U.S. citizens for jobs. In a related development – a complication not necessarily welcomed as both sides of the ag worker debate try to get a consensus bill – Secretary of Agriculture Tom Vilsack reaffirmed immigration reform’s importance, but left the distinct impression during a speech that the U.S. Department of Agriculture’s Farm Service Agency and other local USDA offices could help track “guest workers” on U.S. farms based on the department’s “footprint” in every county. He stressed, however, only the Department of Labor could enforce immigration law.
A bill that would repeal the federal Renewable Fuel Standard on ethanol and take away the Environmental Protection Agency’s authority to set biofuel/gasoline blend levels above 10 percent was introduced by Rep. Bob Goodlatte (R-VA), chairman of the House Judiciary Committee and former chairman of the House Agriculture Committee. He was joined by Reps. Jim Costa (D-CA), Steve Womack (R-AR) and Peter Welch (D-At Large-VT). Goodlatte and Costa were the primary authors in the last Congress of a bill that would have required EPA and the U.S. Department of Agriculture to confer and the RFS on ethanol be lowered if USDA’s corn stocks-to-use ratio fell too low. Under the new bill, the ethanol RFS would disappear in 2014 and EPA would have to rollback the current blend level of 15 percent ethanol, a decision it reached after invoking two waivers to legal requirements. While most of animal agriculture cheered the bill, the Renewable Fuels Association called the motivation behind the bill “backwards, silly and circular logic.”
Gina McCarthy, President Obama’s nominee to head the Environmental Protection Agency, survived her confirmation hearing before the Senate Environment & Public Works Committee, but not before being barraged by questions centered on the agency’s “dismal” relationship with agriculture. Senators quizzed McCarthy, sitting head of EPA’s air and water toxics branch, over the agency’s release of personal farmer/rancher information to environmental groups without first reviewing it, the agency’s failed attempt to regulate “every pond and puddle on every farm,” and the now renown “farm dust” issue from which EPA eventually retreated under congressional pressure. McCarthy said, “I think the EPA has bridges to build with the agriculture community, and I want the opportunity to change that relationship with the ag community.” She said the agency is currently trying to rectify some of the damage aggies say has been done by EPA. Sen. Deb Fisher (R-NE) told McCarthy of ag’s frustration with a “bureaucracy that doesn’t seem to understand the nature of our business … there’s a perception out there that there is collusion” between EPA and various environmental groups. McCarthy told the committee, “Understand we will do everything to ensure those errors are not repeated.” Despite the grilling, McCarthy is expected to be confirmed by the full Senate.
Several media reports indicate that a rule to allow the U.S. Department of Agriculture to buy surplus sugar for refining as ethanol has gone to the Office of Management & Budget for review. The rule would allow the department to operate under the Feedstock Flexibility Program for Bioenergy Producers, buying sugar on the open market and selling it to biofuel refiners. OMB has 90 days to review the rule, a move USDA has previously denied was under consideration. Sugar producers insist the program is necessary to stabilize prices because global sugar crops have been so good, and domestic producers are getting hit with increased foreign competition.