Though a “fiscal cliff” deal is complete in Congress, the fallout certainly isn’t over.
The 113th Congress was sworn in Jan. 3, one day after the contentious battle over tax rates was officially settled with the signing into law of the American Taxpayer Relief Act of 2012. But the new Congress has plenty of unfinished business.
The deal that resulted after Congress’s final discussions over the country’s budget failed to address America’s long-term debt issue, but it also failed to settle another ongoing debate centered around programs, subsidies, and policy for American agriculture in the wake of the expiration of the 2008 Farm Bill.
The five-year bipartisan deal, the Federal Agriculture Reform and Risk Management Act of 2012 which was intended to settle the debate, cleared both the Senate and the House Agriculture committees back in July. But the deal never had a vote on the House floor during the final leg of the lame-duck session.
But in order to avert subsidies and agriculture policy from reverting to price controls set in the 1940s and causing possible price hikes for dairy products, the 2008 Farm Bill that originally expired Sept. 30, 2012, was extended through Sept. 30, 2013, as part of the last-minute package.
Rep. Frank Lucas (R-Okla.), chairman of the House Committee on Agriculture, said the legislation’s one-year extension of the farm bill gives agricultural producers certainty and allows Congress the time to continue ironing out a five-year comprehensive farm bill.
Still, the delays and prolonged uncertainty that the “fiscal cliff” caused has one senator up in arms for tax extensions for farmers.
Sen. Chuck Grassley (R-Iowa), who farms corn and soy beans 50-50 with his son in Butler County, Iowa, urged the Treasury Department and Internal Revenue Service (IRS) this week to grant penalty relief to family farmers who are forced to file their taxes late due to Congress’s delay in coming to terms with the tax act.
“Farmers should not be penalized for the president and Congress’ failure to act on tax legislation on a timely basis,” Grassley wrote in a letter to the agencies. “The IRS should do all it can to ensure forms are ready as soon as possible, but should be prepared to grant penalty relief to farmers who are unable to meet the deadline due to the delay.”
Meanwhile, Agriculture Secretary Tom Vilsack, who accepted President Barack Obama’s offer to stay on with his new administration, expressed concern about the temporary extension for farm policies. “While I am relieved that the agreement reached prevents a spike in the price of dairy and other commodities, I am disappointed Congress has been unable to pass a multi-year reauthorization of the Food, Farm and Jobs bill to give rural America the long-term certainty they need and deserve,” said Vilsack.
Other members of Congress involved in the failed process were also disappointed.
“I would have preferred a five-year bill, but at the end of the day, I didn’t have a five-year bill to vote on,” said Sen. Mike Johanns (R-Neb.) who serves on the Senate Agriculture, Nutrition and Forestry Committee. “I had a one-year extension, and this wasn’t a close call, one-year extension versus the ’49 act. I’ll support the one-year extension, although I’m not thrilled about it.”
As far as the House Committee on Agriculture that is tasked to come up with new legislation the entire chamber can agree upon in the new Congress, Democrats picked up one seat, resulting in a 25-21 ratio compared to 26-20 in the 112th Congress. But there has been no progress towards a multi-year farm bill because they have yet to even hold a meeting.
According to Tamara Hinton, spokeswoman for the committee, they are not yet formally organized as a committee under the House rules. While there are eight new Republicans that have officially joined the committee roster, Democrats have yet to confirm their membership.
But Johanns remains optimistic and sees the bipartisan work of the last session to be a foundation for a permanent solution.
“As I have said on a number of occasions, we were able to get a lot of bipartisan support for that [Federal Agriculture Reform and Risk Management Act of 2012],” said Johanns. “I don’t see any reason why that work can’t be the foundation for the bill that we pass this year. In fact, I would go so far as to say that the Senate bill was a good bill. I will be more than happy to do everything I can to try to get that same version to the floor and to—and get it passed. It was well received by ag groups. I think it was a fair compromise by interests involved. … And I just think that that is the template for going forward.”
Vilsack believes an important aspect of a Farm Bill is its ability to provide a safety net for America’s producers. For example, prior to the expiration of the 2008 Farm Bill disaster programs, the USDA was able to provide more than 400,000 disaster payments totaling more than $4 billion in assistance.
However, conservative members of the GOP caucus want to reform the safety nets, particularly the levels allocated to food stamps, which proved to be a major sticking point during Congress’s greater battle of reducing the deficit.
The failed multi-year farm bill that passed the Senate last year would have cut $4.5 billion in the Supplemental Nutrition Assistance Program (SNAP) program over 10 years, a Congressional Budget Office (CBO) analysis said. The House was looking to cut $16 billion over 10 years from the program.
Johanns is also saying he would like to see the 113th Congress rein in spending and sign a “reform-minded” farm bill into law.
The USDA’s 2012 budget nearly totaled $150 billion, and food stamps for needy families accounted for about half of the department’s spending with the number of people receiving SNAP benefits reaching a record high of 46.6 million as of December 2012, according to the USDA.
According to the CBO’s March 2012 projections, the number of people who receive SNAP benefits will continue to rise slightly from fiscal year 2012 through fiscal year 2014, then decline in the following years. Total federal spending on the SNAP program will peak in 2013 at $82 billion, CBO estimates, one year before the projected peak in participation.
Currently, the president’s 2013 budget for Vilsack and his department calls for a decrease of nearly 3 percent—almost $700 million—below the 2012 enacted level and reduces the deficit by $32 billion over 10 years by eliminating direct farm payments, decreasing subsidies to crop insurance companies and better targeting conservation funding for high priority areas.
However, the budget does not call for a reduction in food stamp funding. Rather, the administration’s budget aims to support all who are eligible for SNAP benefits and allocates $7.5 billion for discretionary nutrition program support for an estimated 9.1 million Americans expected to participate in the Special Supplemental Nutrition Program for Women, Infants and Children (WIC).