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Debt deal leaves ag hanging

The debt ceiling deal hammered out over the weekend puts off making decisions on cuts to agricultural spending and tax credits for ethanol. But that’s not necessarily good news, say lobbyists who have taken a quick look at the bill, which is now posted online by the House Rules Committee.

Under the agreement, still not passed by Congress, a 12-person bipartisan group from both the House and Senate will decide by next Thanksgiving how cuts to agricultural spending will be made.

A package put together by Senate Majority Leader Harry Reid would have  trimmed agricultural spending by $11 billion over 10 years by targeting direct payments (which now cost about $5 billion a year).

“There are no farm bill cuts, unlike the Reid Package, so that $11 billion deal is done,” says Ferd Hoefner of the National Sustainable Agriculture Coalition, one of several groups fighting to maintain conservation program spending.

But that’s not necessarily good news, Hoefner says.  Larger cuts have been considered already this year—more than $30 billion over 10 years by the negotiations led by Vice President Joe Biden, and $48 billion in cuts in the House Budget put together by Representative Paul Ryan (R-WI).

So it’s possible that the new 12-member group of congressional leaders will opt for larger cuts later this year, Hoefner said.

And the process is likely to take power away from House and Senate agriculture committees, he said.

“If the commission decides there will be $30 billion in cuts, then, in essence, the commission will be writing the farm bill,” Hoefner said. “Something in the good government side of lme says the committees of jurisdiction should have the chance to decide how the cuts will be made.”

Because the debt deal doesn’t raise revenue, the 45 cent-a-gallon tax credit for ethanol survives for now.

But that’s not good news, either, to lobbyists working on behalf of the industry.  They were hoping that an idea supported by Senators John Thune (R-SD), Amy Klobuchar (D-MN) and  Dianne Feinstein (D-CA) would have been part of the debt deal. Thune and Klobuchar wanted to apply part of the savings from ending the tax credit early to pay down the federal debt, with a portion left to support blender pumps that can dispense higher levels of ethanol in gasoline.

“It is unfortunate that the debt deal reached this weekend did not include the Thune-Klobuchar-Feinstein Ethanol Reform Agreement, which would have saved American taxpayers $1.3 billion this year and strengthened our nation’s energy future by investing in next generation ethanol and infrastructure to benefit consumers at the pump,” says Growth Energy CEO Tom Buis. “We will continue to advocate for passage of this compromise wherever we can, whether in the debt deal or any other legislative vehicle.”

Adds Matt Hartwig of the Renewable Fuels Association, “the current deal to raise the debt limit does not include any revenue raising measures, including the compromise to reform ethanol tax policy. As this deal calls for a commission and a future budget framework, the possibility still exists for a more comprehensive dialogue about energy tax policy, including how to assure the continued evolution of the ethanol industry to new feedstocks and technologies, how to assure needed investments in vehicles and infrastructure to accommodate higher ethanol blends, and how to end the billions in subsidies and tax preferences still enjoyed by very mature and profitable petroleum fuels.  With the debt ceiling crisis looking as though it has been averted for now, we hope Congress and the Administration are now prepared to address the nation's worsening energy crisis, as oil and gasoline prices continue to rise and the nation's investment in home grown renewable fuels languishes.”

As painful as the debt ceiling debate has been, it likely won’t be the last round of negotiations over the federal debt, added Jon Doggett, the head Washington lobbyist for the National Corn Growers Association.
 
The $2.5 trillion in cuts over 10 years in the current debt deal only slows growth in the deficit, he said, and falls far short of eliminating it.
 
“We’ll be back at this again and again,” Doggett said.
 
And the precedent has been set of holding the debt ceiling hostage in Congress, he added.
 
“I could see either the Democrats or the Republicans, the right or the left, using this in the future,” he said.
 
Doggett said the members of the Corn Growers didn’t seem too upset when he sent out a message last week that Reid’s deficit cutting proposal would have cut direct payments by 30% (by making payments on 59% of base acres instead of 85%). They were more worried about crop insurance, he said.
 
Doggett said he’s not certain how the new committee on deficit reduction will affect the farm bill and ag programs. It’s possible that ag committees may have input into the process, or they may be given spending amounts to work with.
 
“That will be one thing all of agriculture will be very interested in and supportive of -- making sure the ag committees will have input,” he said.

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