Congressional Agenda; Trade; Climate Issues; Biofuels; NAIS; and Ag
Economy
Posted
By Keith Good On February 5, 2010
Congressional Agenda
Lori
Montgomery reported in today’s Washington Post that, “Congress agreed Thursday to revive the
pay-as-you-go budget rules that helped wipe out massive
deficits and balance the budget during the Clinton administration, although the
new version includes a long list of exceptions that would permit Democrats to
add at least $1.5 trillion to the nation’s tab over the next decade.
“The House voted 233 to
187 to approve the rules, known in congressional shorthand as paygo. The rules were adopted last month by the Senate and
now go to President Obama for his signature.
“The return to paygo comes as record deficits push
the government more deeply into debt than at any time since the 1950s.
Democrats attached the new rules to a must-pass measure that raises the legal
limit on government borrowing by a record $1.9 trillion. With the public debt expected to hit
the current cap by next week, the increase — which was approved on a separate
vote, 217 to 212 — authorizes the Treasury Department to continue borrowing to
cover the nation’s bills through early next year.”
The Post article added
that, “Obama praised the
legislation’s passage. ‘PAYGO would hold us to a simple but
bedrock principle: Congress can only spend a dollar if it saves a dollar
elsewhere,’ he said in a statement. ‘Mandatory spending increases and tax cuts
must be paid for; they’re not free, and borrowing to finance them is not a
sustainable long-term policy.’
“The revival of paygo is part of a three-step
strategy for tackling the nation’s budget problems. Obama has
also pledged to freeze non-security
spending for three years and to create a
bipartisan commission to come up with a plan for reducing projected budget
deficits.”
An update
posted yesterday at CQPolitics.com reported that, “Senate Democratic
leaders said Thursday they will try to
move jobs-focused legislation to the floor next week that
would likely include business tax breaks and the extension of numerous economic
stimulus measures that are set to expire.”
Alexander
Bolton reported yesterday at The Hill Online that, “But [Sen. Majority
Leader Harry Reid (D-Nev.)] and other leaders declined to discuss key details,
such as how much the package would cost, how many jobs it would create and how
it would be paid for. Reid had yet to secure a Republican co-sponsor for the
package.”
With respect to the jobs
issue, Rebecca
Smith reported yesterday at The Wall Street Journal Online that, “The U.S. could add hundreds of thousands of jobs if
Congress requires that part of the nation’s electricity be derived from
renewable sources, according to a study released Thursday.
“The study, by Navigant
Consulting, said a renewable-energy standard requiring utilities to produce
between 20% and 25% of their energy from wind, solar and other renewable
sources would create between 191,000 and 274,000 jobs.
“More than half would be
high-value manufacturing jobs that could help the U.S. boost exports and develop an
advantage in technological innovation, said Navigant, a business consultancy that
conducted the study for the RES Alliance for Jobs, a consortium of
renewable-energy companies.”
Trade
Helene
Cooper reported in today’s
“But in announcing the new
strategy [transcript, video],
the commerce secretary, Gary
Locke, did not say when the administration might send Congress three completed
free-trade accords — with Colombia, Panama and South
Korea. Many trade specialists say that is essential to prod other countries to
negotiate with the
“Still, many trade specialists nonetheless welcomed
the new strategy, particularly, they said, because it was the first time that
the Obama administration had embraced trade liberalization vigorously.”
The Times article added
that, “Treasury Secretary Timothy F. Geithner told a House budget hearing on
Wednesday that the administration ‘absolutely’
planned to make passage of the three trade pacts part of the new export
strategy this year. ‘It’s not just that,’ Mr. Geithner said.
‘We want to be in the game in
Darrell
A. Hughes reported yesterday at The Wall Street Journal Online that,
“U.S. President Barack Obama wants the Export-Import Bank to increase export
financing for small- and mid-sized businesses and is proposing that the amount
of credit available be increased
to $6 billion in the next year, Commerce Secretary Gary
Locke said Thursday.
“The proposed increase from $4 billion is part of
Obama’s plan to double exports over the next five years, an
effort being organized by the Commerce Department.”
And Philip
Brasher pointed out yesterday at the Green Fields Blog (The Des Moines
Register) that, “Locke offered little
new as far as agricultural exports specifically. He noted that
the president’s budget proposes an additional $54 million for export promotion.
The department wants to hire more staff overseas to talk up
“At the same time, however, the budget would slash
the Market
Access Program that subsidizes private promotional programs.
The program is especially popular with fruit and vegetable producers and has
subsidized marketing campaigns for everything from asparagus to wine. (The Wine
Institute is getting $7 million this year.) The White House budget office
questions whether the program is really effective, but Congress rejected Obama’s attempt to cut the
program last year.
“By the way, Agriculture Secretary Tom Vilsack
emphasized earlier this week at a budget briefing with reporters that the
president was not promising to double agricultural exports, which totaled
nearly $97
billion last year.”
The Los Angeles
Times editorial
board indicated today that, “It has taken the loss of 4 million jobs
in one year and a nationwide unemployment rate of 10% for President Obama to
finally take a firm stand on the
economic benefits of free trade.”
The LA Times opinion piece
added that, “Of course, doubling annual exports to between $2 trillion and $3
trillion in such short order is a tall order, and it is almost impossible to see how the goal can
be met without action on the three pending free-trade agreements.
Ratification would add an estimated $15 billion annually in exports, and the deal with South Korea is particularly important
for California agriculture; exports of dairy, almonds, walnuts, pistachios and
pomegranate juice could hit the $1-billion mark in the next few years.
Continued inaction, by contrast, would endanger several hundred thousand jobs,
according to the U.S. Chamber of Commerce. Also, the president seemed to
contradict himself by being both populist and pro-trade, urging taxation of companies
that move jobs overseas — that threat is a favorite, but those companies also
account for 44% of the nation’s exports. It’s unclear how penalizing them will
help meet the president’s goal.
“Still, Obama’s positive
tone is welcome.”
In other trade news,
Reuters news reported yesterday (article posted at DTN, link
requires subscription) that, “U.S.
and Brazilian officials have begun talks to try to settle a trade dispute at
the World Trade Organization over U.S. cotton subsidies, the U.S. ambassador to
Brazil said on Thursday.
“The South American
agriculture giant was expected to present a definitive list of U.S. targets for
retaliation in coming days.
“Until last month,
Brazilian authorities said they had seen no signs from their U.S. counterparts
that the United States wanted to negotiate a settlement.”
Yesterday’s Reuters
article stated that, “Total sanctions could be worth $829 million based on 2008
data for the export credit guarantee program, Brazil’s foreign trade ministry
said in December.
“Brazil had already identified more than 200
possible U.S. targets for trade retaliation, ranging from foodstuffs to
textiles to pharmaceuticals.”
And a news
release issued earlier this week by Rep. Adrian Smith (R-Neb.) stated
that, “[Rep. Smith (R-NE)] today joined with a number of his House colleagues
in signing a letter to Taiwan’s Representative to the United States Jason
Yuan expressing their
disappointment with the recent unilateral decision by Taiwan to bar the import
of certain beef and beef products and urging a reversal of the policy.
“Nebraska has the top
three beef cow counties in the U.S., and produces more beef per square mile
than any other state. Nebraska ranks first in the country in live animal and
meat exports ($1.1 billion) and number one in cattle harvest (seven million head).”
“‘Export markets are critically important to
Nebraska’s beef industry. America has the safest food supply in
the world and I am disappointed Taiwan took this action, which is in direct
violation of a bilateral agreement concluded by our nations just two months
ago. Taiwan should honor its commitments to provide full market access to U.S.
beef and beef products,’ Smith said.”
Climate Issues
The Los Angeles
Times editorial
board indicated today that, “If changes in the public mood and the
party alignment of the U.S. Senate have stalled healthcare legislation, they may have thrown the highly anticipated climate
bill under a bus.
“Even before Republican
Scott Brown’s stunning election to the Senate in traditionally Democratic
Massachusetts last month, it was
proving hard to corral moderate Democrats to support a bill capping greenhouse
gas emissions. Now they’re afraid to back anything that could
be perceived as harmful to the economy. ‘Realistically,
the cap-and-trade bills in the House and the Senate are going nowhere,’ Sen.
Lindsey Graham (R-S.C.) told the New York Times. That’s a
distressing comment coming from one of the three senators supposedly crafting a
compromise climate bill that’s capable of achieving a filibuster-proof majority
in the Senate.
“President Obama has backed down too. On
Tuesday, he signaled that cap-and-trade could go the way of healthcare
reform’s ‘public option,’ saying it could be removed from the climate bill.
That would eliminate the market mechanism for pricing greenhouse gas pollution
— and without setting such a carbon price, other measures under consideration,
such as a national renewable energy standard, won’t go far enough to
significantly slow global warming.”
However, Christa
Marshall of ClimateWire reported yesterday at The New York Times
Online that, “The Obama administration’s
top climate adviser strongly defended a cap on emissions a day after the
president suggested Congress might move an energy bill without such a cap in
place.
“White House climate and
energy adviser Carol Browner used the words ‘cap’ and ‘price signal’ several
times yesterday in describing what the administration would be pushing for in
the days ahead to spur new jobs and curb the ‘dangerous pollutants that
contribute to global warming.’
“‘We need comprehensive energy
and climate legislation that will not only allow us to lead the world … but
also enhance our national security,’ Browner said in front of renewable energy
industry representatives at the Retech Conference in Washington, D.C.”
And with respect to
Senator Scott Brown (R-Mass.), Kevin
Friedl and Christopher Snow Hopkins reported yesterday at the National
Journal’s Energy and Environment Blog that, “Scott Brown’s unlikely victory in
Massachusetts may have reinvigorated the Republican Party, but one polling company says that’s no guarantee
the freshman senator will join his caucus in opposing cap-and-trade legislation.
“Joel Benenson, of the
Benenson Strategy Group (D), today presented new polling data conducted on
behalf of the Climate Protection Action Fund — an affiliate of Al Gore’s
Alliance for Climate Protection — that shows a majority of Massachusetts independent voters support a bill
that includes a mandatory cap on emissions.”
Meanwhile, Darren
Samuelsohn of ClimateWire reported yesterday at The New York Times
Online that, “Key senators are
studying whether power plants should be the guinea pig industry for the
nation’s first cap-and-trade system designed to curb greenhouse gas emissions.
“Electric utilities are
responsible for about a third of the country’s annual heat-trapping pollutants,
and they have been involved for about 15 years in a similar market-based
mechanism that has successfully reduced acid rain.
“But the focus on just one
industry also comes with perils, and it is far from certain that Senate
politics would be any different if lawmakers set aside the House-passed
economywide approach that goes after major energy, transportation and
manufacturing companies — accounting for more than two-thirds of U.S.
emissions.”
The article noted that, “Industry lobbyist Scott Segal said he doubts a
power plant-only approach has much of a chance on Capitol Hill as
lawmakers representing the power companies would quickly start to hear about
how they are taking on too great of a burden compared with other industrial
sectors.”
Mr. Samuelsohn explained
that, “The power plant-only approach
gains another wrinkle today when a bipartisan Senate coalition introduces
legislation setting up a cap-and-trade system for three traditional air
pollutants: sulfur dioxide, nitrogen oxides and mercury [related
article, related news
release.]
“Co-sponsors Sens. Tom Carper (D-Del.) and Lamar Alexander (R-Tenn.)
previously worked together on air pollution issues during the George W. Bush
administration. Back then, they also wrote a bill with carbon limits.
“They are coming back for another run this time —
minus the carbon — because of public health concerns
associated with a lack of strong federal controls. And they also want to give
the electric utility industry greater certainty as they seek to make
multibillion-dollar capital investments. Currently, power companies are holding
back as they wait for U.S. EPA to outline its regulatory plans following a 2008
federal court decision that struck down a Bush-era cap-and-trade approach to
slash NOx and SOx emissions from power plants in the eastern United States.”
Biofuels
With respect to executive branch action
regarding biofuels earlier this week, Allison
Winter of Greenwire reported yesterday at The New York Times Online
that, “U.S. EPA Administrator Lisa Jackson yesterday announced the new
regulations for low-carbon fuels, which would implement the long-awaited
renewable fuels standard that Congress included in the 2007 energy bill. The final rule is friendlier to ethanol than a
proposal EPA floated last year, which incited bipartisan rage from Midwestern
lawmakers, who thought the analysis was unfair to farmers and ethanol producers.”
The article added that, “But some lawmakers are not backing down in their
efforts to fight the rule, despite the fact that the final rule
won hesitant support from the ethanol industry and praise from environmental
groups. Lawmakers in the House and Senate who have fought to block EPA’s work
on the rules indicated last night that they will continue to oppose the
agency’s work on the effort.
“‘Typical of most
decisions made in Washington, there is some good and some bad in the renewable
fuel standard final rule announced today,’ House Agriculture Chairman Collin
Peterson (D-Minn.) said in a statement yesterday. ‘To think that we can credibly measure the impact of
international indirect land use is completely unrealistic, and
I will continue to push for legislation that prevents unreliable methods and
unfair standards from burdening the biofuels industry.’
“Last year Peterson
successfully tacked language on to the House-passed climate bill (H.R. 2454)
that would have delayed EPA’s work on the regulations. He also cosponsored
a bill earlier this week that — among other things —would stop the agency from using land-use
calculations as part of its assessment of ethanol’s carbon footprint.”
Ms. Winter noted that, “Now that EPA has finalized the rules, legislative
efforts to block the effort would be more complicated. But
Peterson and other lawmakers could try to advance similar bills to keep EPA
from expanding the regulations or issuing new regulations with different
science in the future. They
could also use spending bills in an effort to squelch funding for their
implementation.
“A stab at the agency’s appropriations could come
from Rep. Jo Ann Emerson (R-Mo.), a cosponsor of the bill with Peterson who
sits on the House Appropriations Committee.
“Emerson offered an amendment to EPA’s 2010 spending
bill that would have barred the agency from considering the effects of
international land-use changes when calculating the carbon footprint of
biofuels. The committee narrowly rejected that proposal, 29-30.
“Emerson’s spokesman,
Jeffrey Connor, said last night that the congresswoman would continue to look
for ways to fight the regulations this year — either through legislation
or appropriations.”
Reuters writer Charles
Abbott reported on Wednesday that, “A new U.S. program that subsidizes biomass crops for energy use may
cost $263 million this year — nearly four times its expected cost — with an
opening emphasis on forest and sugar scrap.
“The Obama administration
cited the Biomass
Crop Assistance Program (BCAP) on Wednesday in steps to encourage
clean energy production. It would broaden the geographic base of a bioenergy
industry now dominated by corn ethanol production mainly in the Midwest.
“BCAP went into operation
last summer on an interim basis. A more permanent regulation was opened for
comment by the Agriculture Department on Wednesday.”
The Reuters article added
that, “Farm activists have worried
for months that BCAP would be dominated by businesses that are longtime
recyclers of scrap materials to power their operations, rather than newcomers.
“When BCAP was created, it
was forecast to $70 million over five years. On Monday, the administration
estimated the cost at $263 million this fiscal year and $479 million in fiscal
2011, which opens Oct. 1.”
See a related analysis on
this issue that was posted yesterday by Chris Clayton at DTN’s Ag Policy Blog,
“USDA
Now Tries to Cap BCAP.”
National Animal
Identification System (NAIS)
William
Neuman reported in today’s New York Times that, “Faced with stiff resistance from ranchers and
farmers, the Obama administration has decided to scrap a national program
intended to help authorities quickly identify and track livestock in the event
of an animal disease outbreak.
“In abandoning the
program, called the National Animal Identification System, officials said they
would start over in trying to devise a livestock tracing program that could win
widespread support from the industry.
“The agriculture secretary, Tom Vilsack, will
announce the changes on Friday, according to officials at the Agriculture
Department, who spoke on condition of anonymity because the decision had not
yet been made public.”
Ag Economy: Production
Costs; and Productivity
University of Illinois
Agricultural Economist Gary Schnitkey noted in a paper from earlier this week
(“Fertilizer
Prices in 2008, 2009, and 2010”) that, “Fertilizer costs for corn in 2010 likely will average $100 per acre
for corn on high-productivity farmland in Illinois. These costs will be below
2009 costs. These fertilizer costs are based on fertilizer
prices reported in a new report listing average fertilizer prices in Illinois.”
Dr. Schnitkey added that,
“A new report
released by AMS reports average fertilizer prices in
Earlier this week, USDA’s
Economic Research Service provided an update to a data set regarding agricultural
productivity in the United States; ERS noted that, “It is widely agreed that increased productivity is
the main contributor to economic growth in
--
Keith Good
President
FarmPolicy.com, Inc.
(t) 217.356.2269
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