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Debt deal leaves ag hanging

DANIEL LOOKER 08/01/2011 @ 10:16am Business Editor

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.”

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